Good News for Buyers—Bad News for Borrowers

• New vehicle supply in the US is just about up to pre-pandemic levels, although inventories remain low for Honda and Toyota, according to Cox Automotive.
• Higher inventory levels overall pushing a return to substantial discounts off of the sticker price is offset by the high interest rates set by the Federal Reserve in its battle against post-pandemic inflation.
• “I’m a believer that we should be cutting rates by three or four times,” said Cox Chief Economist Jonathan Smoke.

Save for Toyota, Honda, and Lexus, new vehicle supply in the US is just about up to pre-pandemic levels, and average transaction prices are down 5% from their pandemic peak, to $47,244 in February.

This spring could finally be a good time to shop for a new vehicle. But that’s if you can deal with the car loan’s interest rates, or pay cash.

“In 2024, we officially bid farewell to the seller’s market,” says a key takeaway from Cox Automotive’s first-quarter 2024 Industry Insights and Sales Forecast.

Cox analysts forecast the US will buy 15.7 million new vehicles in calendar year 2024, up only slightly from the 15.5 million sold in CY23. About half of this year’s sales increase will come from fleet, to an estimated 2.9 million, leaving 12.7 million (rounded off) for retail sales.

Cox’s Kelley Blue Book estimates EV sales will be up 15% for Q1 of ’24 versus Q1 of ’23, when numbers are finalized at the beginning of April. EV volume is expected to decline slightly from the fourth quarter of ‘23 but will remain above 300,000 for the quarter, equal to about 8% of the overall market.

New vehicle inventory was up 50% this outgoing quarter versus Q1 of 2023, with 940,000 more cars and trucks available year over year. Cox Automotive analysts expect little disruption in inventory, so far, after this week’s tragic Francis Scott Key bridge collapse in Baltimore, as auto and auto part shipments divert to other ports.

Higher inventory levels pushing a return to substantial discounts off of the sticker price is offset by the high interest rates set by the Federal Reserve in its battle against post-pandemic inflation.

Cox Chief Economist Jonathan Smoke said that interest rate offset should diminish if the Fed