Car buyers have been experiencing some relief as new car prices have been gradually decreasing throughout 2023. According to Kelley Blue Book, the average new car price in October was $47,936, marking a 1.4% decrease compared to October 2022 and a significant 3.5% drop from the peak in December 2022. This welcome trend has many prospective buyers wondering: When Will Car Prices Drop Again and will this downward trajectory continue into 2024?
To shed light on this pressing question, GOBankingRates consulted David Meniane, CEO of CarParts.com, for his expert insights and predictions on the future of car prices.
Will Car Prices Continue to Fall in 2024? Expert Opinion
Following recent market patterns, it’s anticipated that car prices will likely continue their descent into 2024. However, it’s crucial to acknowledge that market forecasts are not guarantees.
“Predicting the exact trajectory of car prices in the coming year remains a complex task,” Meniane stated. “However, recent data offers encouraging signs. Last month’s average new vehicle price of $47,936, reflecting a 1.4% year-over-year decrease based on KBB data, suggests that the trend of decreasing new car prices may extend into 2024.”
One key factor that could drive further price reductions is a potential oversupply of new vehicles in the global market.
“Recent industry reports indicate that global car production is poised to outpace sales by an estimated 6% this year,” Meniane explained. “This surplus, potentially reaching 5 million vehicles, will likely necessitate price adjustments to facilitate sales and manage inventory.”
Meniane also highlighted the significance of timing your purchase in 2024 to secure the best possible price.
“The time of year plays a crucial role in car buying,” he advised. “Historically, the period from October to January, particularly the month of December, presents the most favorable window for buyers. During this time, manufacturers often roll out substantial discounts and incentives to boost year-end sales. For those concerned about prices in the early months of 2024, waiting until the latter part of the year might yield more budget-friendly opportunities.”
Which Car Types Will See the Biggest Price Drops?
Meniane anticipates that certain vehicle categories, specifically SUVs and used sedans, are poised for more significant price drops in the upcoming year.
“Projections indicate a potential rise in oil prices in 2024,” he noted. “This could lead to reduced demand for SUVs and other vehicles with lower fuel efficiency, prompting manufacturers to implement competitive pricing strategies to maintain sales volume in these segments. Consequently, this market dynamic may also enhance the affordability of used sedans, particularly hybrid models, compared to other vehicle types available.”
Conversely, the price trends for new electric vehicles (EVs) and hybrid cars are expected to move in a different direction.
“Vehicles equipped with advanced electric and hybrid technology are likely to maintain or even increase their price points,” Meniane clarified. “Several converging factors underpin this projection, including growing consumer interest in eco-friendly transportation, increasing societal emphasis on sustainability, and ongoing government incentives designed to encourage EV adoption. These demand drivers will likely contribute to stable or rising prices in the EV and hybrid segments.”
Furthermore, vehicles heavily reliant on semiconductor chips may also experience price stability or even increases, as supply chain challenges persist in certain sectors.
“Ongoing disruptions in the global supply chain, particularly the persistent shortage of semiconductor chips, have significantly impacted the automotive industry in recent years,” Meniane explained. “These challenges have elevated production costs, which are subsequently reflected in higher prices for consumers. Should these issues persist into 2024, certain models, especially those with complex electronic systems, could face price increases due to constrained supply and elevated manufacturing expenses.”
Tips for Smart Car Buying in 2024
For individuals planning to purchase a vehicle in the coming year, Meniane recommends exploring strategies to mitigate costs and make informed decisions. One effective approach is to consider the used car market as a viable alternative to buying new.
“Prospective buyers should explore the option of purchasing a used car, ideally one with a transparent vehicle history report and documented parts information,” Meniane suggested. “Advances in vehicle durability and technology mean that many pre-owned vehicles offer comparable performance and features to newer models, but at a more accessible price point.”
Conducting thorough research is also paramount when navigating the car buying process.
“Comprehensive research is indispensable,” Meniane emphasized. “Purchasing a vehicle involves numerous considerations, and buyers should leverage online resources such as car comparison tools, customer reviews, and expert evaluations to arrive at well-informed decisions.”
Finally, it’s essential to adopt a realistic perspective on your car affordability and consider the holistic costs associated with vehicle ownership.
“It’s crucial to be mindful of the total cost of ownership, encompassing factors beyond the initial purchase price, such as maintenance, fuel efficiency, and insurance premiums,” Meniane cautioned. “While some vehicles may present a lower initial sticker price, they might incur higher long-term expenses due to factors like increased fuel consumption, more frequent maintenance needs, or elevated insurance rates stemming from security or anti-theft considerations.”
By staying informed and considering these expert predictions and tips, car buyers can navigate the market effectively and make financially sound decisions in 2024.
