Financial Wellness
Is Now a Good Time to Buy a Car?
If you're on the fence about buying a new car, there's good news, as conditions are improving for buyers. Cox Automotive Chief Economist Jonathan Smoke says 2024 will be the best year for consumers to buy a new car since before the pandemic. As new vehicle supply increases, transaction prices come down. As a result, automakers are expected to offer more deals and interest rates should ease.
Conditions have changed
Here is an overview of some of the factors changing the landscape for buyers in 2024.
Larger inventories
At the end of 2023, there were 51% more new vehicles on dealer lots compared with a year earlier. And according to Automotive News, U.S. new-vehicle inventory is expected to reach a four-year high in 2024 amid easing supply-side constraints and stagnant consumer demand.
The increased supply should put an end to a historically rough period for car buyers. The trim and color combo you want that had been lacking should start returning to normal.
Higher inventories of new cars have many dealers competing with each other by discounting cars. According to Money.com, "Going forward, car shoppers can expect dealerships to offer more reasonable prices and manufacturers to improve incentives like rebates and financing deals."
Car prices projected to drop
Because of improved supply-chain conditions, experts forecast new car prices will fall this year. New vehicle transaction prices, according to reports by Cox, "...are expected to decline moderately." In fact, prices began to stabilize in October. Amid easing inflation and the possibility of interest rate cuts from the Federal Reserve, car buyers should find better financing deals.
Hope for better interest rates
Economists are forecasting that auto loan rates are expected to show signs of improvement in auto loan financing conditions toward the latter end of 2024. The trend will be moving in shoppers' favor, making buying a new car much more affordable.
Looking ahead
The car-buying environment should continue to improve for consumers as the year goes on. "It's going to be a much better time for a consumer to buy a car in 2024 versus (2023)," said Paul Waatti, an industry analyst at market research firm AutoPacific.
If you have an older car, you may want to think about the conveniences and safety features of a newer vehicle simply for the technology improvements. Features such as: sensors for driver assistance, advanced anti-lock brakes, adaptive cruise control, and lane departure warnings.
Trade-in values are often negotiable. If you are serious about making a deal, expect the dealer to have some wiggle room.
Ultimately, the decision to buy should be based on your specific circumstances and priorities.
If you're in the market, make sure to weigh your options and do your research—whether you buy online, at the dealership, or elsewhere. This will help you understand the different features available, the price range, and other information that will help you to make the best decision.