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If you’re in the market for a car this year it won’t be quite as daunting as it was during the pandemic and its immediate aftermath. Inventories are up and price increases are slowing. Here’s what to expect for the auto industry in 2024:
1. Sales of new cars should hit 15.7 million, up from 2023.
Vehicle availability has steadily improved after years of shortages, so more shoppers should find a ride to suit them. Price increases are slowing down.
Buyers should have more room to haggle. They may even see some sales incentives, which all but disappeared during the COVID-19 era. Deals won’t exactly be juicy. But some price breaks and low-interest, or even zero-interest, financing could be back on the table. A few years ago, asking for such concessions would have been unthinkable.
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2. Sales of used cars should pick up slightly.
Prices have halted their recent decline. Used autos are about 40% more expensive than comparable ones from before the pandemic, as supplies remain tight.
3. Hybrid vehicles are the hot sellers this year.
Look for their market share to rise from 9% last year to 14%. Most consumers aren’t yet sold on electric cars. Hybrids offer fuel savings at a modest price premium and generally drive like traditional cars.
Note how common hybrids are becoming. Once reserved for economy cars, hybrid tech is now available in just about every class of vehicle, from family sedans, minivans, full-size pickup trucks, and small trucks to every size of sport-utility vehicle. Toyota’s venerable Camry will become hybrid-only, starting with the 2025 model year. Its newly redesigned Prius gets rave reviews and almost 60 miles per gallon. Ford has a hit on its hands with the small but practical Maverick hybrid pickup truck.
4. Sales of EVs will grow, but their momentum is waning.
Look for EV models to account for 9% of total vehicle sales this year, vs. 8% in 2023. Manufacturers are slowing future EV production plans as inventories build up on dealer lots. Dealers recently had 113 days’ worth of supply of EVs at the current sales pace, about double the level for gas-fueled cars. If you’re interested in an electric car, you’ll have more room to negotiate.
Also, note that the federal tax credit for EVs has become more generous. The $7,500 is now available at the time of purchase from the dealer, instead of as a credit filed with your taxes. However, fewer electric cars are eligible for the credit now, because they don’t meet the made-in-America requirements.
While carmakers are pumping the brakes on EVs, they aren’t giving up. 37 new models are coming out this year, with a similar tally due in 2025. Government fuel efficiency rules make this a necessity. And automakers are hoping that car buyers, who are traditionally brand-loyal, will switch to their new EV options.
This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.
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FAQs
We expect around 15.5 million new sales in 2024, on par with 2023 as the industry navigates the shifting economic environment. This sales trend could continue into 2025 with some upside if interest rates start to decline as expected.
Will 2024 be a good time to buy a car? ›
If you are in the market for a new vehicle, the second half of 2024 might be an even better time to buy. According to new data from Cox Automotive, demand for new vehicles could be softer in the second half of the year.
What is the outlook on the auto industry? ›
The automotive market is expected to normalize this year. On the one hand, we expect car registrations to slow down following a strong rebound in 2023. On the other hand, car manufacturers face reduced pricing power and contracting margins amid intensified competition and an uncertain environment.
What is the outlook for the US auto industry? ›
For 2024, we expect light vehicle sales to grow 3.7% above last year's level, rising to 16.1 million units. Growth is expected to slow relative to 2023 as the initial post-pandemic bounce-back recedes and elevated interest rates remain a constraint on sales activity through most of the year.
Is there still a chip shortage for cars in 2024? ›
In recent years, the auto industry has been hit by a shortage of semiconductor chips. Industry experts and surveys conducted by KPMG and the Global Semiconductor Alliance in the fourth quarter of 2022 indicated the shortage would end in 2023, with more chips than needed in 2024.
What is the outlook for the automotive industry in 2025? ›
Several car industry experts say that sales of cars worth more than $100k were outselling lower-priced cars 3 to 1 in the first quarter of 2022. They predict that sales gains of this magnitude will continue through the end of 2025.
Are car prices dropping in 2024? ›
At the end of 2023, most experts predicted that car prices would continue to fall slightly in 20242. They also expected new car production to increase in 2024, leading to lower prices for new and used vehicles.
Will car loan rates go down in 2024? ›
Auto loan rates are expected to stop rising and possibly start descending in 2024, but they'll likely remain elevated in comparison to recent years (alongside the broader interest rates environment).
What not to say to a car salesman? ›
Eliminating the following statements when you buy a car can help you negotiate a better deal.
- 'I love this car! ' ...
- 'I've got to have a monthly payment of $350. ' ...
- 'My lease is up next week. ' ...
- 'I want $10,000 for my trade-in, and I won't take a penny less. ' ...
- 'I've been looking all over for this color. '
We expect 2024 light vehicle production to be flattish as automakers focus on value over volume, while retail sales are expected to increase low-single digits based on fairly healthy economic backdrops in the U.S. and Europe, moderating vehicle prices, and sustained consumption stimulus in China.
The automotive industry never stops evolving with new and exciting technology emerging every year. So far in 2024, we have seen a range of new technology that will change how we drive and interact with our cars.
Are auto manufacturers catching up? ›
Some chip shortages could remain through 2023 and into 2024, though supply of semiconductors and raw materials will generally improve in the auto sector. The auto sector can expect a strong year in 2023, with global car production up 3%. As semiconductor supply returns, global auto pricing should remain stable.
How is the auto industry doing in 2024? ›
The automotive supply chain will likely never look like it did pre-pandemic, but inventory levels generally recovered in 2023 and are expected to continue doing so in 2024 and 2025. Car prices remain elevated in 2024 due to inflation but are showing initial signs of decreasing as inventory stabilizes.
What is the outlook for a new car in 2024? ›
With higher supply and lower prices, new-vehicle sales in 2024 are expected to gain over 2023, but market growth will be constrained, with an increase of less than 2% expected and the market new-vehicle market reaching sales of 15.7 million1 sales.
What is the EV prediction for 2024? ›
In 2024, EV Volumes expects 16.6 million EV sales, equating to a 19.2% share of the light-vehicle market. Therefore, plug-in deliveries are forecast to grow by 17%, while the total market is only expected to improve by 1%.
What does the future hold for the automotive industry? ›
As cars become 'computers on wheels', more value comes from digital technology design and software. Manufacturing is going modular, with less in-house production and greater focus on design and assembly. The shift to EV as well as supply chain challenges are causing a rethink of manufacturing footprints.
What is the forecast for automotive production? ›
U.S. motor vehicle production is projected to reach some 11.7 million units by 2025.
What is the future of the car market? ›
The Cost of Automobiles Continues To Rise, but that May Be Slowing Down. As we near the halfway point of 2022, new and used car prices remain at or near all-time highs. But when you look at the details, there are signs that the rate of increase may be slowing down – or even reversing.
