Great news for new car shoppers! As you've heard CarPro Show host Jerry Reynolds say on the radio show, new vehicle prices are dropping as inventory increases. At the same time, used vehicle prices remain high, which is great if you have a trade-in, but not so great if you're buying used. A new report from Cars.com backs that up.
New Car Prices Dip, Used Car Prices Remain High
According to Cars.com's new February Insights Report, affordability is on the rise as new-car prices dip below $49,000 for the first time in a year. Researchers attribute the drop to increasing new vehicle inventory. But those looking for used cars are struggling to find quality vehicles amid an aging and high-mileage inventory.
“The good news for car shoppers is that overall, new-car inventory is improving across price segments, with the most growth in the sub-$30,000 segment, which has been stagnant for months. It’s nowhere near pre-pandemic levels but still represents a release on the pressure valve for anyone wanting a new vehicle without breaking the bank,” said Rebecca Lindland, senior director of industry data and insights at Cars Commerce. “Meanwhile, those in the market for used cars face ongoing challenges, grappling with older inventory with higher mileage.”
Cars.com says February's data shows that with new-car inventory up and prices down, shoppers will have an easier time finding their ideal vehicle. Meanwhile, researcher say used trade-in values are increasing due to the high demand for newer, low-mileage vehicles. The report also shows an increased demand for used electric vehicles as their prices drop.
Here are some of the report's key insights:
- New-car prices recede below $49,000 for the first time in over a year. February saw the average new-car price fall to $48,942 from a high of $50,000 in August 2023 — signaling increased dealer discounts and automaker incentives and mirroring the buyer-friendly market conditions seen before the pandemic.
- The share of entry-level new cars is on the rise. Market share for vehicles under $30,000 increased for the second straight month, from 13% to 14%, after months of stagnating at 12%. While this is good news, 14% is still far from the 38% inventory share held by vehicles in this category pre-pandemic.
- Days on lot are up more than double for new cars. Rising inventory and softening demand mean new vehicles are sitting on lots for an average of 65 days — compared to the 30-day average during the pandemic’s new-car supply shortage — and it’s pushing prices down.
- Used vehicles under $20,000 have, on average, over 22,000 more miles compared to pre-pandemic vehicles. It isn’t much better for used models under $30,000, which average about 11,000 more miles compared to pre-pandemic vehicles.
- Used EV prices dropped almost 20% year over year, causing a nearly 30% increase in consumer demand. With an average price of $38,000, used EVs offer more affordable options for shoppers.
Additional insights from February include:
- EV incentives and tax credits provide pricing relief to some EV buyers. The Volkswagen ID.4 (No. 1) and the Hyundai Ioniq 5 (No. 4) both have a lower total cost to purchase and finance, putting these EVs in the top five of Cars.com’s New Car Price Index.
- Cadillac and Toyota are the fastest-moving new-car brands. Cadillac takes the crown for fastest-moving luxury brand, driven by the XT4 and XT5 models, while Toyota leads mass-market brands thanks to the RAV4, Corolla and Sienna.
- Domestic-branded pickup trucks hold the top four new-car searches on Cars.com. Toyota is the only non-domestic brand featured in the top 10 thanks to the reputations of the Tacoma and Tundra models for reliability and durability.
To read the Cars.com February 2024 Insights Report click here.
