With New Car Prices Stuck at All-Time Highs, Automakers Brace for Consumer Pushback

• Coming off sales slowdowns in Q3, and auto loans rates actually increasing since the Fed cut interest rates, automakers ramp up incentives headed into the traditionally slower winter season 
• Despite a relatively strong Q3 performance in the US, electric vehicles (EVs) manufacturers are still expecting intensified competition from Chinese counterparts in 2025
• The U.S. presidential election raises new questions about the future landscape for EVs, interest rates and other economic factors influencing car affordability

Chicago, IL – November 11, 2024 – While new and used car prices remain near record highs – at $49,496 for new cars and $32,251 for used cars – interest rates have yet to significantly decrease, despite two recent cuts by the Federal Reserve. As a result, Q3 new vehicle sales saw a slump as consumers experienced sticker shock at the dealer and found themselves increasingly priced out, according to the latest data and analysis from AI car shopping app CoPilot. Relief may be on the horizon for those consumers, as incentives – which are now largely concentrated among extremely high-inventoried vehicles – will likely become more widespread through the market as 2025 models move onto the lot.

“Consumers who haven’t bought a car in a few years will be shocked walking onto a dealer lot these days,” said Pat Ryan, Founder and CEO of CoPilot. “Even with financing and cash-back incentives, the reality is that car prices are still about a third higher than they were only four years ago. Looking ahead to 2025, automakers are facing a reckoning of how they can better align their offerings to better meet the needs and preferences of the consumer.”

While used cars are still priced 36% above their pre-COVID levels, recently their prices have been falling faster than that of new cars, especially for bigger, more expensive cars. For instance, new pickup truck prices fell by 3% in the past year to $58,080, while used pickup truck prices fell by 10% to an average of $35,153. New SUVs, meanwhile, actually increased in price by 2% in the past year, to an average of $66,537, while used prices fell by 10% to an average of $37,185. For consumers who need to buy in the short term, used cars may present an overall stronger value as the price gap between new and used cars continues to widen.

EVs See a Comeback, But Competition from China Looms

Over the past year and counting, electric vehicles have seen a slowdown in sales as automakers grappled with the consequences of overproducing relative to consumer demand. In Q3 2024, however, automakers like Tesla and GM reported EV sales growth, likely stemming from the increasingly generous incentives available. Still, EVs – with an average inventory of 102 market days supply – have a long road to travel toward mainstream adoption. One of the main obstacles they will face is competition from and within China, where competitors like BYD and Nio are able to produce EVs much more affordably than their U.S. and European counterparts.

“Outmaneuvering Chinese automakers on developing and marketing an affordable EV is going to be a formidable challenge, even for EV frontrunners like Tesla,” Ryan added. “But in order to convince more mainstream consumers to take the plunge on an EV, it’s a challenge they’ll need to take on. Price has long been one of the biggest pain points for consumers on buying an EV, especially in one of the most expensive car markets in history, and we need to see Tesla and U.S. automakers respond.”

Impact of Trump Administration on the Auto Industry 

With the election of President Trump, questions remain for both car shoppers and the auto industry on how his election will impact affordability for vehicles overall and EVs in particular. President-elect Trump has promised to eliminate the $7,500 federal EV tax credit, automaker incentives for battery factories and mining, and the program to expand EV charging infrastructure. Still, given the substantial support he received on the campaign trail from Tesla CEO Elon Musk, it remains to be seen whether these promises will materialize (though if so, they would likely have a more substantial impact on Tesla’s competitors than Tesla itself). Trump also has pledged to raise tariffs on imported goods, which could impact foreign brands and already exist to stymie competition from China.

However, Trump’s long-term strategy may be geared toward incentivizing Chinese automakers to produce their more affordable EV models in the U.S. (a similar move to that made by Japanese automakers in the 1980s). Eventually, over time, this could create more options in the market for consumers and lower prices for EVs broadly.

In the short term, interest rates remain one of the main drags on vehicle affordability. Treasury yields, which typically correspond with auto loan rates, have increased since the Federal Reserve began cutting rates, and since the election last week. Another lingering question is how involved President-elect Trump intends to become in Fed policy and the long-term impact that would have on interest rates.

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 Guaragno

kclose@groupgordon.com

732-609-2644