The automotive industry has experienced significant fluctuations in the prices of used vehicles over the past few years. As we move into 2024, there are promising signs that the soaring prices witnessed in recent times may be leveling off. Let’s explore the outlook for used car prices in 2024 and the factors influencing this stabilization.
A Look Back: Fluctuations in Used Car Prices
In recent years, the market for used vehicles has been characterized by unprecedented price surges, a trend that can be attributed to a variety of factors such as the global pandemic and disruptions in the supply chain. Despite a 7% decline in 2023 and a nearly 15% drop in 2022, used vehicle prices are still significantly higher than pre-pandemic levels. This surge in prices has been a concern for potential buyers looking to invest in pre-owned vehicles.
The Anticipated Stabilization
Automotive data firm Cox Automotive anticipates that wholesale prices
for used vehicles will experience a marginal increase by the end of 2024, with a projected rise of 0.5% from December 2023. However, the market is expected to witness fluctuations on a monthly basis due to factors such as selling seasonality and other market dynamics. This forecast offers a glimmer of hope for consumers who have been navigating the challenges posed by inflated used car prices.
Insights from Industry Experts
Jeremy Robb, the Senior Director of Economic and Industry Insights at Cox Automotive, emphasized the potential for 2024 to be less volatile than the preceding year. However, he cautioned that the market always necessitates preparedness for unexpected developments, pointing to the inherent unpredictability within the wholesale market.
Impact on Consumers
The expected stabilization of used vehicle prices in 2024 is poised to benefit potential car buyers. While the market is still on the path to recovery from the price surges witnessed during the pandemic, the prospect of more stable pricing provides a degree of relief for consumers exploring the option of purchasing pre-owned vehicles.
Retail Prices and Consumer Trends
Traditionally, retail prices for consumers have closely mirrored changes in wholesale prices. However, it is worth noting that retail prices have not declined as rapidly as wholesale prices in recent years. As of the latest data, the average listing price for a used vehicle stands at $26,091, reflecting a 3.9% decrease from the previous year. This figure is also 7.5% lower than the average listing price at the end of 2021.
Sales Projections for 2024
Cox Automotive forecasts a modest increase in used vehicle sales, with expectations set at less than 1% growth to reach 36.2 million. This projection encompasses 19.2 million in used vehicle retail sales. In comparison, the forecast for new cars and trucks in the U.S. suggests a “pessimistic” increase of 1.3% to 15.7 million units in 2024.
Industry and Market Outlook
Jonathan Smoke, the Chief Economist at Cox Automotive, highlighted the overall growth forecast for the economy and the auto market. While the projected growth is relatively modest at 1% to 2%, it signifies a positive trajectory compared to the prospect of a recession. Additionally, the surge in new supply, reminiscent of levels seen in spring 2020, is expected to favor consumers and contribute to downward pressure on prices as we progress through 2024.
The Rise of Electric Vehicles
Looking ahead, Cox Automotive anticipates a notable increase in the sales of all-electric vehicles
, with expectations that they will account for over 10% of retail sales for new cars and trucks in 2024. This marks a substantial rise from the 7.4% of retail sales represented by 1.1 million units in 2023.
As we navigate the automotive landscape in 2024, the stabilization of used car prices brings a sense of equilibrium to a market that has been marred by fluctuations in recent years. The anticipated marginal increase in wholesale prices, coupled with the rise of electric vehicles, presents a promising outlook for both consumers and the industry as a whole. With cautious optimism, stakeholders are poised to adapt to the evolving dynamics of the used vehicle market, as the landscape continues to transform in response to economic and consumer trends.