New Car Prices Decrease as Inventory Levels Rise
Buying a new car has been a frustrating experience for many people in recent years, with record-high prices and vehicle shortages plaguing the market. However, there is now hope on the horizon, as J.D. Power’s recent sales forecast indicates that the situation is starting to improve.
According to J.D. Power’s research, the average new-vehicle retail transaction price has actually fallen compared to a year ago. In June 2023, the average new car buyer paid an eye-watering $46,229. However, by June 2024, that price had dropped to $44,857—a 3% decrease. This decline in prices is expected to lead to a surge in new retail sales this month, with buyers projected to spend nearly $44.6 billion on cars. Although this figure is still 6.5 percent lower than the previous year, it would make June 2024 the fourth highest sales month on record.
The drop in prices can be attributed in part to the increasing inventory levels. As more cars reach dealers’ lots, manufacturers are becoming more generous with their incentives, including promotional financing interest rates and cash-back offers. In fact, automakers’ incentive spending per vehicle has increased by over 50% from a year ago. This surge in incentives has been particularly driven by lease deals, which account for almost 23 percent of new retail sales.
The rise in inventory levels also means that buyers now have an easier time finding the vehicle they want without having to wait or embark on long-distance searches. There are fewer pre-sold vehicles, and new cars are expected to spend an average of 45 days on dealer lots—a 17-day increase from June 2023. This increased availability is a welcome change for buyers who have faced lengthy waits and limited options in the past.
While this shift in the market is good news for dealers, buyers, and automakers alike, it hasn’t been entirely stress-free. Recently, a cyberattack on CDK Global’s Dealer Management System created complications for thousands of dealers nationwide. The outage has slowed down the sales process and made communication between dealers and buyers more challenging. Unfortunately, this disruption is expected to continue through the July 4 holiday weekend—a crucial promotional period for the auto industry.
In conclusion, the automotive market is experiencing a positive shift as new car prices begin to decline and inventory levels rise. The increased availability and lower prices are providing buyers with greater options and making the buying process less arduous. However, the recent cyberattack serves as a reminder that external factors can still impact the industry. Despite the challenges, this is an opportune time for those in the market for a new car to take advantage of the improved conditions.