The automotive market is currently witnessing a significant shift, with the price difference between new and used vehicles reaching unprecedented levels. For consumers navigating this landscape, understanding the average price of a car is more crucial than ever. Recent data from Edmunds reveals a widening gap that impacts purchasing decisions and budget considerations.
In the third quarter of 2024, the average new car price reached $47,542, a notable $20,365 higher than the average used car, which stood at $27,177. This striking disparity, exceeding $20,000 for the first time, highlights a major trend in how consumers are approaching car buying. While new car prices have shown relative stability or slight increases, used car prices have experienced a decrease of 6.2% compared to the previous year. However, it’s important to consider this decrease in the context of a substantial 31.4% surge in used car prices since Q3 2019. This increase was largely fueled by the pandemic and the ongoing global chip shortage, which severely disrupted automotive supply chains and inflated used car values.
Historically, incentives offered on new cars played a role in narrowing the price gap between new and used vehicles. However, these incentives diminished considerably due to the supply chain disruptions. The good news is that as supply chains begin to stabilize, these incentives are making a comeback, offering some relief to new car buyers. Edmunds reported that the average discount on new vehicles increased to $1,744 in Q3 2024, a significant rise from the $828 seen in the same period in 2023. Despite these improving incentives, new cars are taking longer to sell. The average new vehicle now spends 57 days on the lot before being sold, marking the longest turnover period in over three years. Conversely, used cars are selling much faster, averaging just 36 days on dealer lots, indicating continued strong demand in the used car market.
The lower average price of a used car makes them an attractive option for budget-conscious buyers. However, financing realities present another challenge. A significant portion of potential car buyers, over 56%, anticipate monthly payments of $300 or less – a budget expectation rooted in pre-pandemic norms. The current average monthly payment for a used car has climbed to $548, substantially exceeding the financial plans of many buyers. This increase in monthly payments reflects not only higher car prices but also changes in interest rates and financing terms.
For those operating with tighter budgets and aiming for monthly payments in the $200-$300 range, the available choices have drastically reduced. Today’s frugal car shoppers are likely limited to used cars that are, on average, three years older and have approximately 16,000 more miles compared to what they could have afforded for the same monthly budget just four years prior in 2019. This shift underscores the evolving dynamics of the automotive market, emphasizing the increased financial commitment now associated with vehicle ownership. The average price of a car, whether new or used, reflects these broader economic changes and market pressures.
In conclusion, understanding “What Is The Average Price Of A Car” in 2024 requires considering both new and used markets, the significant price gap between them, and the various economic factors at play. While used cars offer a lower entry price point, financing costs and the overall increase in vehicle prices mean buyers at all budget levels need to adjust their expectations and potentially consider older or higher-mileage vehicles to stay within their financial comfort zones.
