The COVID-19 pandemic left quite the mark on the automotive industry as a whole, prompting massive production cutbacks, supply chain issues, and various other lingering problems that still persist today, years later. In 2023, however, average transaction pricing for vehicles finally began to cool off as production increased to the point where inventory has also rebounded in a big way. Now that the calendar has turned to a new year, analysts at Cox Automotive expect this slow return to normalcy for the U.S. auto market to continue in 2024, too.
That entity’s 2024 forecast for the U.S. auto industry as a whole took a look at a wide array of data, and came to the conclusion that nothing suggests any sort of dramatic swing in either direction over the coming year. This means slow growth for the industry, stemming from continued high interest rates and a resulting drop in consumer spending, though analysts expect those interest rates to decline over the coming year.
At the same time, Cox Automotive expects new vehicle inventory to continue to rise throughout the year, reaching pre-pandemic levels and spurring more incentives. This will place downward pressure on average transaction pricing, transforming it back to a buyer’s market rather than favoring the seller, as has been the case for years now.
“A decade from now, when we look back at the years immediately following the global pandemic of 2020, we’ll be awed by the dramatic swings and unprecedented circumstances the economy and auto market endured,” said Cox Automotive Chief Economist Jonathan Smoke. “To name a few, we saw historic appreciation in vehicle values, unimagined drops in supply, and interest rates moving from all-time lows to 23-year highs at an unforgiving pace. The past four years have been chaotic, even by auto industry standards, and have shifted many normal seasonal patterns out of whack, which adds to the difficulty of forecasting what comes next.”