Auto market begins to shift

At Cars Commerce, we focus on simplifying everything about buying and selling cars. Cars Commerce’s new Industry Insight Report, crafted by data analysts, delves into macro and micro market trends by analyzing price, inventory, demand and consumer and dealer behaviors from across the company’s platform. We pull insights from the flagship marketplace and dealer reputation site, Cars.com, with 26 million monthly unique visitors and 13 million consumer reviews, solutions and website provider Dealer Inspire, as well as trade-in and appraisal data from AccuTrade. We bring that mission to life for our customers, consumers and the industry with timely data, actionable insights and industry perspectives only Cars Commerce can provide. 

With the launch of our new Industry Insights Report, we are debuting the Cars Commerce New Car Pricing Index (NCPI), which tracks new vehicles’ total purchase plus interest costs. With an index of 100 as a baseline for MSRP, costs such as discounts, loan interest and taxes will drive the index higher or lower. The NCPI provides the industry with a monthly guide to the impact of changing prices and financing costs on vehicle ownership.

Shift to a buyer’s market?

For 2024, affordability is a central trend in the automotive market. Consumers should be encouraged by recent market indicators, with a slight price reduction and moderating interest rates complementing a notable 36% year-over-year improvement in new-car inventory. This increase in available vehicles has led to cars remaining on dealer lots for extended periods often exceeding 30 days, providing shoppers more leverage for negotiation and signaling a potential shift from a seller’s to a buyer’s market. 

There is additional good news for budget-conscious consumers: New vehicles priced under $30,000 experienced a substantial 63% year-over-year increase in availability, adjusting its market share from 12% to 13%. 

The overall improvement in new-vehicle inventory across all prices marks a pivotal shift as the industry recovers from past supply chain and product disruptions. With the average price of a new car stabilizing at $49,096, we’re monitoring increases in incentives and discounts closely, recognizing the importance of these factors in maintaining consumer engagement and sales momentum. 

Used-car scarcity increasing

January’s improved new-car market affects an already challenged used-car market as consumers evaluate readily available new vehicles. However, on average, used cars priced under $30,000 have 10,000 more miles and are 1.4 years older than similarly priced vehicles five years ago, with the average age rising from 5.2 years in January 2019 to 6.6 years in January 2024. These factors represent a stark increase in vehicle age, meaning some buyers are getting older cars for their money.

The supply of used vehicles under $30,000 has diminished significantly since five years ago, with 800,000 fewer vehicles available, a decline of 36.8%. Despite these challenging conditions, the average price of all used cars decreased slightly year over year (YoY) to $28,859 for the month, down about 3%. However, the inventory of used vehicles declined by 4% YoY, compounding the scarcity issue. Monitoring lease returns, a significant source of used-car inventory, will be crucial to gauging the future landscape of the used-car market.

More EV inventory on dealer lots

The electric-vehicle (EV) market is witnessing substantial fluctuations primarily driven by the introduction of new models and the inherent volatility associated with a relatively new market segment. The recent push for more EV adoption fell during the chip shortage, which limited the supply of EVs. However, supply constraints are easing as the market begins to normalize, allowing dealers to stock EVs onsite, a shift from the previous model where customers generally placed orders online. This change both increases the availability of EVs and contributes to a higher number of days vehicles stay live on dealer lots. 

Despite the positive developments in supply, demand for new EVs has declined slightly compared to January 2023. This shift can be attributed to very high new-EV search traffic last year, lower gas prices this year and better availability of used EVs, all leading to softer demand and a saturated market.

In contrast, demand in the used-EV market is climbing, fueled by a significant increase in supply and double-digit declines in prices year over year. As the EV market matures, we expect to see ongoing large swings in inventory numbers and days live. This shift reflects the transition towards dealers stocking EVs directly, moving away from the custom order model and adjusting the evolving dynamics of supply and demand in the EV sector. 

Throughout February, we will work with our team of automotive experts to evaluate data from across the Cars Commerce platform. We’ll monitor our flagship marketplace and dealer reputation site, Cars.com, and trade-in and appraisal data from AccuTrade to identify macro- and micro-level trends impacting the automotive retail market.

Rebecca Lindland
Sr. Director of Industry Data and Insights, Cars Commerce