Tax Season Turbocharges Car Market

According to the IRS, the average tax return is up nearly 5% year-over-year, so we’re watching how this tax season impacts the car market and consumer interest in new- and used-vehicle purchases.

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What we’re watching

New car prices continue to drop

Through March, new-vehicle searches are up nearly 4% monthly on, and new-car prices are averaging $48,709, down -1.4% from last month. At 131.9 percentage points, the New Car Price Index (NCPI) was flat month-over-month, but fell -3.1 year-over-year thanks to increased discounting and better inventory. This is the sixth straight month of declines for the NCPI dating back to October 2023, providing relief to consumers.

Used-car supply climbs

Used-car supply increased by almost 5% year-over-year, and average prices fell -5%, hitting a new 32-month low of $28,669. Cars Commerce’s AccuTrade data shows a 15% decline in used-vehicle trade-in values from the 2022 peak, but remains well above pre-pandemic levels due to elevated MSRPs and used-car supply constraints for 1-5-year-old vehicles.

Is now the time to buy an electric vehicle?

The market is showing promising signs for the EV shopper. data reveals a substantial 15% increase in year-over-year and month-over-month searches for new EVs, indicating a growing interest in this segment. A 107% increase year-over-year in new EV inventory on dealer lots reflects the trend from a reservation-based ordering model to a more traditional “if you build it, they will buy it” stocking system. This healthy supply allows dealers to showcase EVs and consumers to test drive these new models.

What’s ahead?

While volatility remains, there are reasons to be optimistic about the new-, used- and electric-vehicle market. Spring typically marks the beginning of the car-buying season, and with new-car prices dropping and used-car supply constraints, we are monitoring closely what patterns will emerge in April.

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

March 2024 full report

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