Did you know the U.S. auto market is getting ready for a big bounce back in 2024? After lots of tough challenges, things are looking up. This change will bring new ways to buy and interact with cars. I’m thrilled to give you an in-depth look at where the industry is headed.
Key Takeaways
- The U.S. auto market is expected to return to normalcy in 2024 after a tumultuous period.
- The economy will experience weak growth without a recession, setting the stage for a more stable market.
- New vehicle inventory will normalize, with supply chain issues gradually resolving.
- Sales growth will be constrained but less chaotic compared to recent years.
- Electric vehicle adoption will continue to rise, with over 1 million EV sales and a 10% market share.
- Dealers will face profitability pressures due to higher MSRPs, invoices, and the need for EV infrastructure investments.
- Consumers can look forward to more choices, better deals, and an improved online buying experience.
Economic Outlook: Weak Growth, No Recession
Looking to 2024, the economy will see weak growth. But a recession isn’t likely. High interest rates and declining inflation will affect how much people spend and earn. Jobs and incomes won’t grow fast. This will keep the economy steady though not very lively.
The job market might get weaker, but not enough to worry. Unemployment should stay low, which is good for the auto industry. Although salaries won’t rise rapidly, they’ll still be better than usual. Lower interest rates will also make cars more affordable. This will help keep the auto industry strong.
In 2024, the economy might just be “boring,” which is fine news. Even with slow growth, there won’t be a big recession. The steady situation means the auto industry can move forward carefully. It’s a peaceful time compared to the ups and downs of past years.
High Interest Rates and Declining Inflation
During 2024, we’ll keep feeling the effects of high interest rates and declining inflation. The Federal Reserve is trying to manage prices. This effort will shape how people spend and the business climate in general.
Stable Labor Market with Low Unemployment
Even though the job market might slow down, not a lot of people will be without jobs. This will help the auto industry stay strong. Wages won’t rise quickly, but they will be better than usual. It’s a good bit of news for those needing financial help.
Slow but Steady Consumer Spending Growth
Consumer spending won’t jump due to high interest rates and declining inflation. Growth in spending will be slow but steady. This means car makers and dealers need to change how they do things. They must meet the changing interests of the buyers in a slow-growing economy.
“The economy may be ‘boring’ in 2024 but is expected to avoid the chaos of a recession.”
New Vehicle Inventory Normalization
The car market is getting back on track after the pandemic hit. By 2024, it will get a lot better. After facing tough times due to supply chain issues, new car stocks are improving. They will almost reach normal levels, with about 3 million units which is a huge jump from the low during the chip shortage.
Higher Incentives and Discounting
More cars being available means better deals for you. Auto brands and sellers will start offering bigger sale discounts and incentives. This includes lower interest rates on car loans and more room for price negotiation. It’s all to help deal with high car prices that stayed high recently.
Modest Transaction Price Declines
Even with more cars and better deals, prices won’t drop too much. However, buying a new car should be a bit easier. This is thanks to more cars on the market, good loan options, and lower prices due to sales. So, overall, 2024 should be a good year for buying a car.
“The normalization of new vehicle inventory, coupled with higher incentives and modest price declines, will provide consumers with more choices and better deals in the year ahead.”
Things are looking up in the car market for next year. These changes mean buying a car will be easier and more affordable for many. It brings hope to everyone looking to own a new vehicle.
Constrained New Vehicle Sales Growth
Despite more new cars being available, sales in the U.S. look slow. Cox Automotive thinks new car sales will increase by less than 2% in 2024. They predict 15.7 million new cars will be sold. High prices and interest rates are holding back the market from recovering fully.
Flat Retail Sales, Improving Fleet Sales
Retail new car sales are expected to stay flat due to affordability issues. But, sales to fleets should get better, just not as fast as in 2023. The balance between retail and fleet sales will be a key factor in shaping the overall new vehicle sales landscape in 2024.
Million Sales, Less Than 2% Increase
The new car market is heading towards normal, but it’s slow. Cox Automotive predicts 15.7 million new cars will be sold in 2024, only a small increase. This small growth shows the challenges the car industry still faces.
| Metric | 2023 Forecast | 2024 Forecast | Percent Change |
|---|---|---|---|
| New Vehicle Sales | 15.6 million | 15.7 million | +1.9% |
| Retail New Vehicle Sales | 13.6 million | 13.6 million | 0.0% |
| Fleet New Vehicle Sales | 2.0 million | 2.1 million | +5.0% |
The table displays predictions for new car sales in 2023 and 2024. It points out the slow growth, especially in retail sales, compared to growth in fleet sales. This indicates a changing trend in the market.
“The constrained sales growth is a result of affordability challenges, with high prices and interest rates limiting the market’s recovery to historic highs seen prior to the pandemic.”
Used Vehicle Market Minimal Growth
In 2024, the automotive industry will start to recover. But, the used vehicle market will only slightly grow. There will be about 36.2 million used vehicles sold in total, just 1% more than last year. Retail used vehicle sales will be about 19.2 million. This increase is small due to the slow production years from 2020 to 2022.
Certified Pre-Owned Sales Outpace Used Market
Certified pre-owned (CPO) sales are expected to do better than the general market. Analysts think CPO sales will grow by 3%, hitting 2.7 million units sold in 2024. This rise shows that more buyers want the extra confidence that a detailed inspection and warranty provide for a used vehicle.
| Metric | 2023 (Estimated) | 2024 (Forecast) | YoY Change |
|---|---|---|---|
| Total Used Vehicle Sales | 36 million | 36.2 million | 1% increase |
| Retail Used Vehicle Sales | 19 million | 19.2 million | 1% increase |
| Certified Pre-Owned Sales | 2.6 million | 2.7 million | 3% increase |
New vehicles have been hard to find because of recent production issues. This has limited the growth of the used car market. Yet, more people are turning to CPO vehicles. They offer a good mix of quality and affordability with their detailed checks and warranties.
Dealer Profitability Pressures
In 2024, the automotive industry will be challenging. Dealer profits face more pressure. Even though prices for new cars are up, keeping profit margins is tough for dealers.
Higher MSRPs and Invoices, Lower Margins
The costs of materials, labor, and technology are rising. This leads to higher MSRPs and invoice prices for dealers. But, this doesn’t mean more profit. Dealers need to give more deals to attract customers, hurting their profit margins.
Investments Needed for EV Infrastructure
Electric vehicles (EVs) are more in demand. Dealers must invest in charging stations and employee training for EV sales and services. These investments cost a lot and reduce the small profit margins weiter.
Dealers must find ways to be more efficient and find new ways to make money. This could mean improving their operations, offering more products, or focusing on services and finance for extra income. Yet, they still face rising costs and must adapt to a changing car industry, making things hard for their profits.
“The automotive industry is facing a challenging landscape in 2024, as dealer profitability comes under increasing pressure.”
Car dealership future 2024: Electric Vehicle Adoption
The world of car dealerships is on the brink of big change. By 2024, more than a million electric vehicles (EVs) are expected to be sold in the U.S. This surge will claim over 10% of all car sales.
The growth isn’t just in pure EVs; hybrid models are becoming more popular too. They are forecasted to make up 24% of all cars sold. These trends will shake up how dealerships operate in the future.
Federal Incentives and Increased Leasing
Federal support is driving the switch to electric cars. It helps consumers choose, like with EV sales. The number of electric cars leased is also rising. This makes them a more doable choice for more people.
| Metric | 2023 | 2024 |
|---|---|---|
| EV Sales | 1 Million Units | Over 1 Million Units |
| EV Market Share | 9% | Over 10% |
| Electrified Vehicle Share | 22% | 24% |
| EV Leasing | 20% | 25% |
Dealerships must change with the times to stay competitive. They can do this by focusing on electric car sales. They should take advantage of government support and offer more leasing. This will meet the new wants of car buyers.
“2024 will be the ‘Year of More’ for electric vehicles, with sales topping the 1-million-unit record set in 2023 and accounting for over 10% of total sales.”
Return to Balance and Normalcy
Looking forward to 2024, the U.S. auto market is getting back on track after tough years. We’ll see more options, great prices, and a smoother online buying process. This all highlights how important it is to own a car.
More Choices, Better Deals for Consumers
New vehicle stocks are getting back to normal, aiming to hit 3 million units. This means more car brands and models for you to check out. With deals and discounts making a comeback, you might just find your dream car for less.
Improved Online Buying Experience
The way we buy cars online is getting easier and more pleasant in 2024. Auto dealerships are putting more effort into their online setup. So, if you like shopping from your couch, the whole process should feel smoother and more enjoyable. This change is meant to make everyone happier when buying a car.
Emphasis on Personal Vehicle Ownership
Recently, Americans are valuing owning their own car more than just the concept of transportation. They want the freedom and control that comes with having their own wheels. This change in mindset, along with the impact of COVID-19, is pushing more people back to owning their own cars. As a result, the auto market is heading back to a better, more balanced state.
“The U.S. auto market is poised to return to a state of balance and normalcy in 2024, providing consumers with more choices, better deals, and an improved online buying experience, all while emphasizing the importance of personal vehicle ownership.”
Conclusion
The automotive market in 2024 is expected to stabilize after recent upheavals. Cox Automotive predicts several key trends for the year. These include slow economic growth and more people adopting electric vehicles.
New vehicle inventories are evening out, leading to a more balanced market. While dealer profits face challenges, signs of progress are clear. The insights provided are crucial for those involved in the auto business.
2024 will be a year of change and settling down for the U.S. car market. The future will bring both tough times and chances to grow. Understanding these predictions helps everyone in the industry get ready for what’s coming.