The costs of new and used cars are slowly falling: smart news for consumers, even if all the news is smart, especially the continued peak interest rates. And costs remain elevated, even if they’re moving in the right direction.
The most significant update is that the supply of new and used cars continues to increase, due to the recent shortage of resources. In response, automakers and dealers are offering deeper discounts to move steel forward.
Overall, forecasters expect U. S. auto sales to soar. U. S. inflation rates are greatly decreased in April 2024 compared to April 2023. A joint forecast by J. D. Power and GlobalData forecasts sales of about 1. 3 million units, down 0. 9% from last year.
It’s as bad as it gets, in terms of needing details. The J. D. Power-GlobalData forecast calls for retail sales of about 1. 1 million new cars for the month, up 2. 1% from last year. This is offset by a decrease in sales to fleets.
“Inventory at dealerships continues and discounts are expected to increase,” the forecast said.
The average retail transaction value of a new vehicle in April is estimated at $45,093. This represents a cut of $1,172, or 2. 5%, compared to April 2023. The monthly record of $47,329 in December 2022, according to forecasts.
In a separate forecast, Cox Automotive says it expects total U. S. auto sales in April, adding retail and fleet, of about 1. 3 million.
According to J. D. Power-GlobalData, the retail stock of new cars is expected to reach around 1. 8 million units, representing an increase of 3. 2% from March 2024 and 40% from April 2023.
The biggest discounts come with superior stock. New car dealers borrow cash to buy stock and pay it back when they sell. The longer stocks stay in the field, the more interest dealers pay, which is why the industry calls “floor” loans.
Between that and higher interest rates, traders are motivated to sell as temporarily as possible.
This was not a factor at the beginning of the pandemic and the ensuing shortage of new products. Until the middle of last year, consumers were lining up to buy (above the sticker price, yes) as soon as new cars arrived in the parking lot. .
Since then, this combination of very high demand and very low source has diminished, but the industry has not yet resumed business as usual.
Based on April’s first component sales, J. D. Power reports that 16% of new cars sold above the manufacturer’s retail price, up from 30. 5% in April 2023.