New Car Standstill: Sales Falter With Car Shoppers Not Yet Benefiting From Interest Rate Cuts

  • Less than 1% of new cars are currently priced under $20,000, and only 10% below $30,000
  • Even with limited options, many shoppers are still gravitating toward more compact, affordable models
  • Responding to a lack of consumer interest, manufacturers ramp up EV incentives, with sales soaring by 51% over Q3


Chicago, IL – October 7, 2024 – Consumers are still feeling the pinch from unrelenting inflation in the car market, with automakers reporting Q3 sales declines and monthly vehicle payments reaching new highs despite the Federal Reserve cutting interest rates in September. According to the latest data from AI car shopping app CoPilot, new cars remain 29% more expensive than they were before the pandemic, now averaging $49,619. 

Less than 1% of new cars are currently listed under $20,000, while only 10% of the new car market is priced below $30,000 – a telling sign of the decline of affordably priced cars. Used cars – with an average price of $32,433 – are even more inflated, with prices up by 37% since March 2020. This is only set to increase as used car inventory has fallen by 13% over the summer, and with fewer off-lease cars (stemming from a drop in leasing activity starting in 2021) returning to dealers to replenish supply.

Amid persistent affordability challenges, consumers are gravitating toward smaller cars. For instance, inventory of compact SUVs is 10% less than the average for new cars overall, and sedan inventory is 25% lower. Minivans remain the most inflated segment in the car market, with new minivan prices up by 30% since pre-COVID and used minivan prices up by 45% since the start of the pandemic. 

New Rams and Jeeps – both Stellantis brand vehicles that have experienced significant sales challenges in the past year – have seen more substantial recent declines, both down by more than $1,000 (or 2%) during the month of September. However, the average Ram listing price is $60,698, while the average new Jeep costs $49,858; even with price cuts and incentives, their all-in cost still remains prohibitively expensive to many consumers. 

“Even with the Fed cutting interest rates, it will take time before consumers are able to benefit from a more affordable car market,” said CoPilot CEO and Founder Pat Ryan. “Car shoppers walking onto a dealer lot for the first time in several years unfortunately will find a much more limited selection of traditionally affordable, sub-$20,000 and sub-$30,000 cars. For consumers who need to buy in the short term, it’s worth considering compact cars made by foreign brands – like Nissan, Honda, and Toyota – which have generally seen less inflation over the past four years.”


EVs and Hybrids on the Rise

Though EVs suffered from sluggish consumer demand earlier in the year, their fortunes reversed in Q3 as manufacturers ramped up incentives and other offers to entice consumers. EV sales increased by 51% from July to September, and their inventory dropped by 38% to 81 market days supply (which, however, is still well above the new car average of 71 market days supply). The Q3 performance of Tesla – which has cut prices multiple times amid flagging consumer demand – also reflects this broader trend, with the EV manufacturer reporting a 6% increase in deliveries from a year prior.

“All year, automakers have been dealing with the repercussions of the fact that they overproduced EVs relative to consumer demand,” Ryan added. “EV makers, particularly Tesla, tried to tackle this misstep aggressively this spring and summer, offering discounts on certain models, insurance deals, and interest-free financing incentives. As a result, this summer, for the first time in months, automakers – including legacy players like Ford and GM – finally were successful in convincing more consumers to take the plunge on an EV.”

Hybrids – which have surged in popularity this year as EV interest waned – also continued their hot streak this summer. During Q3, hybrid sales were up by 32% and inventories falling by 17% to 58 market days supply. Over the past year, new hybrid prices have fallen by 6%, to an average of $55,730, compared to just 2% for both gas-powered and electric vehicles.



About CoPilot

For journalists and publishers, CoPilot’s data has the best real-time view on prices, sales, and inventory in the new and used car market. By monitoring the online inventory of virtually every dealer in the country, every day, CoPilot:

  • Provides fresh, comprehensive, and daily data
  • Offers insight on the new and used market, broken down by segment, brand, model, and fuel type
  • Looks at current retail prices, which (unlike wholesale prices) are a much more accurate reflection of how much consumers are currently paying for cars

For consumers, CoPilot offers the first-ever AI-assisted car shopping app, which:

  • Searches virtually every dealer and analyzes millions of vehicles to find the best car for your needs, at the right price
  • Helps you avoid add-ons and hidden fees, and negotiate the best price
  • Does not take money from dealers, providing customers with truly unbiased recommendations


Media Contact:

Kerry Close

kclose@groupgordon.com

732-609-2644