Why Money Expert Predicts 2024 Will Be Best Year To Buy a Car in Last 5 Years
Written by
Dawn Allcot
Edited by
Daria Uhlig
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Those in search of a new car in 2023 faced significant hurdles. Between rising interest rates, low inventories and supply chain challenges leftover from the pandemic, new cars cost more than ever — if you could find the model you wanted with a reasonable delivery date.
An analysis by iSeeCars revealed that the average new car in June 2023 was priced 8.5% over the June 2022 sticker price, and only six cars — four of them electric vehicles or hybrids — came in below sticker price.
But that’s about to change, according to experts in the field. Cox Automotive chief economist Jonathan Smoke recently told the Detroit Free Press, which is part of the USA Today network, that it could be the best year to buy a car since 2019.
“With supply normalizing and the economy stabilizing to hit a soft landing and not turn into a recession, it leads to an environment that is the most normal we’ve encountered since 2019,” he said.
Things have already started looking up in the last quarter of 2023, when Kelley Blue Book reported that the average transaction price for a new vehicle fell by 1.5%, year-over-year, in November.
However, even as vehicle prices fell, interest rates remained high, making financing a new car cost-prohibitive for many people. According to Smoke, the average interest rate on a new car loan in December 2023 was 9.5%, down from a high of 10% in October but nearly double the December 2021 average rate of just 5.2%.
With interest rate hikes paused for at least the next month, consumers may be able to take a breath and finance that new vehicle. And auto dealers will be lining up the offers to help make it happen.
Although new-vehicle manufactured suggested retail prices may continue to rise in 2023, inventories should increase and dealers should be willing to offer incentives and price cuts to move cars off the lot.
Smoke said he has already seen vehicles discounted about 2% off the MSRP, and he believes that discount will rise to 3% — and eventually closer to the pre-pandemic average discount of 6%.
“I suspect we will see that strength starting in the spring,” said Smoke. “Traditionally the tax return season is an important time of year in the vehicle market.”
Looking forward through 2024, Smoke predicted, “For consumers looking to buy a vehicle, it’s the best year by far since 2019.”
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