New car prices have been on a downward trend throughout 2023, with the average new car selling for $47,936 in October, according to Kelley Blue Book. This represents a 1.4% decrease since October 2022 and a 3.5% decrease since their peak in December 2022.
To gain insights into whether this trend will continue into 2024, GOBankingRates interviewed David Meniane, CEO of CarParts.com.
Meniane believes that if car prices follow recent trends, they will likely continue to decrease in 2024. However, he acknowledges that nothing is guaranteed. Meniane points out that in the previous month, the average price for a new vehicle experienced a 1.4% dip compared to the previous year, according to the latest KBB data. This suggests that new car prices might drop further in 2024.
One factor that could contribute to price drops is an oversupply of new cars. Meniane refers to a recent report that estimates global car production will exceed sales by 6% this year, resulting in a surplus of 5 million vehicles. These excess vehicles will likely receive price cuts to facilitate their sale.
Meniane also emphasizes that the timing of the purchase in 2024 could affect the price. He advises buyers to consider buying a vehicle between October and January, especially during the month of December when manufacturers typically announce large discounts and deals.
Regarding which types of cars will see the biggest price drops, Meniane predicts that SUVs and used sedans could experience significant decreases. Rising oil prices in 2024 may make less fuel-efficient vehicles, such as SUVs, less expensive to purchase. Manufacturers are likely to offer competitive pricing to convince consumers to buy larger cars, as people will want to avoid high gas bills. This, in turn, may make used sedans, especially hybrid models, more affordable compared to other vehicles on the market.
On the other hand, new electric vehicles (EVs) and hybrid cars are expected to maintain or even increase their price points. Factors such as growing consumer interest, an increasing societal emphasis on sustainability, and government incentives for EV owners will contribute to steady demand, which will keep EV prices stable or rising.
Additionally, cars reliant on semiconductor chips may experience steady or increased prices due to ongoing supply shortages. Meniane explains that disruptions in the supply chain and shortages of semiconductor chips have affected the automotive industry, driving up production costs. If these challenges persist into the next year, certain models heavily reliant on electronic components may experience price increases.
For consumers planning to buy a car in 2024, Meniane suggests looking for ways to cut down on costs, such as purchasing a used car with a reliable car report and parts history. He highlights that many preowned vehicles offer excellent performance at a fraction of the cost, thanks to advancements in durability and technology.
Being an informed buyer is crucial when heading to the dealership. Meniane advises doing thorough research using online resources like car comparison tools, customer reviews, and expert opinions to make an informed decision.
Finally, he encourages buyers to be realistic about their budget and consider the total cost of ownership, including maintenance, fuel efficiency, and insurance rates. Some cars may have a lower sticker price but higher long-term costs due to fuel consumption, frequent maintenance requirements, or poor security features.
In conclusion, the downward trend in new car prices is expected to continue into 2024, driven by factors such as oversupply, rising oil prices, and competitive pricing strategies. However, various factors, including demand for EVs and hybrid cars, semiconductor chip shortages, and timing of purchase, will influence specific car models’ price movements.
