New-Car Prices Dip Amid Supply Challenges, While Used Market Stabilizes

New Car Market Overview: Surplus Inventory Leads to Price Drops

The automotive market is undergoing a major shift as new-car prices dip, largely driven by surplus inventory in select brands. Jeep, Ram, Dodge, and Chrysler, all Stellantis brands, have seen notable inventory increases, which directly influenced their pricing strategies. In September 2024, these brands held an average of 131 days of unsold inventory, significantly higher than the market average of 72 days.

The surplus resulted in price drops across Jeep, Ram, and Dodge vehicles, with average declines ranging between 3% to 7%. However, despite the lower prices, high inventory levels have also translated into longer shelf times. For example, Dodge prices fell by 3%, but days live spiked by 165%, primarily due to the discontinuation of models like the Challenger. Despite such challenges, Stellantis has continued to utilize customer incentives to aid in the movement of inventory.

Challenges with New Inventory: Model Year 2025 Launches

Several new models are facing challenges in the market. The Dodge Hornet, for instance, witnessed a dramatic spike in days live of nearly 400%. The average price for new vehicles remained stable around $49,000, maintaining a similar trend over the past year. In contrast, brands like Toyota and Honda, which have been grappling with supply constraints, saw year-over-year price increases of 3% and 8%, respectively, indicating robust demand.

Seasonal Trends and Inventory Adjustments

September 2024 also saw a seasonal dip in new car searches, a typical post-Labor Day trend, with searches down by 5% month-over-month. Additionally, hurricanes Helene and Milton had a significant effect on the market, particularly in the Southeastern United States, including Florida, Georgia, Tennessee, Virginia, and the Carolinas. The natural disasters led to a 7% week-over-week drop in demand for these regions, compared to only 1% in the rest of the country.

Despite these setbacks, inventory levels have remained elevated, increasing by nearly 30% year-over-year as manufacturers like Ford, Chevrolet, and Honda replenished stock following the 2023 chip shortage recovery. Ford led this growth, with popular models like the Super Duty F-250 and Bronco driving a 33% year-over-year increase in inventory.

Used-Car Market: Stability Amidst Easing Prices

Unlike the fluctuations seen in the new-car segment, the used-car market demonstrated stability in September 2024. The average price for used cars was $28,882, down by 5% year-over-year. This trend suggests that the market is adjusting as new-car availability improves, which has made used vehicles a more appealing option for budget-conscious buyers.

However, consumers looking to purchase used cars are still dealing with higher prices for older, higher-mileage vehicles. The average age of used vehicles reached 5.2 years, while the average odometer reading stood at 60,716 miles, marking a 2% increase year-over-year. Despite these increases in age and mileage, used-car prices have remained steady over the past six months, indicating a balanced market.

Electric Vehicle Market: Diverging Trends in New and Used Segments

The electric vehicle (EV) market has been a topic of considerable debate, with divergent trends in the new and used segments. In September 2024, new EV inventory increased by almost 50% year-over-year, thanks to General Motors' expanded lineup, including models like the Chevrolet Blazer EV and Cadillac Lyriq. However, despite the influx of new models, many EVs are taking longer to sell, with an average shelf time of 86 days compared to 72 days for all fuel types.

On the other hand, affordably priced models like the Chevrolet Equinox EV are faring better, reflecting a growing consumer demand for reasonably priced electric options. Meanwhile, the used EV market saw prices decline by 9% year-over-year, compared to a 5% drop across all used vehicles. This price drop led to a 32% increase in used EV searches, compared to a 2% decline in searches for all used cars, as consumers sought value in an otherwise high-cost market for new electric vehicles.

Federal Reserve Interest Rate Cut: Impact on Auto Loans

Another crucial factor impacting the automotive market has been the Federal Reserve's recent rate cut. The reduction in interest rates has positively influenced auto financing, providing more favorable terms for consumers looking to finance new or used vehicles. Lower interest rates have also provided incentives for some buyers to consider new cars over used models, particularly with the availability of incentives and discounts offered by manufacturers like Stellantis.

MotorVero has emerged as a leader in auto financing, offering prequalification services that are both convenient and transparent. Whether you're considering a new car or a pre-owned vehicle, getting prequalified with MotorVero ensures you receive the best rates tailored to your needs. Their customer-first approach to financing makes them an ideal choice for car buyers looking to navigate the complexities of auto loans in an ever-changing market.

Stellantis: Inventory Sell-Down and Labor Challenges

Stellantis, one of the world's largest automotive manufacturers, has been aggressively selling down its inventory. The company is navigating supply surpluses, ongoing labor disputes with the United Auto Workers (UAW), and the discontinuation of certain models. The aggressive sell-down strategy has involved offering incentives and promotions, which are expected to help reduce the surplus.

However, ongoing labor disputes have introduced uncertainties. If negotiations with the UAW do not conclude favorably, production slowdowns could become a real possibility, which would, in turn, impact inventory levels and new-car pricing. It's a balancing act for Stellantis, as they work to maintain production while managing their existing stock.

Used-Car Market Dynamics Amid Rising Delinquencies

High auto loan delinquencies have emerged as a critical issue in the used-car market. As delinquencies rise, lenders have tightened their requirements, making it more challenging for some buyers to obtain financing. This has put additional pressure on used car values, contributing to a more competitive environment for those looking to sell used vehicles.

At the same time, repossessions have increased, creating a situation where more used vehicles are entering the market. This influx is expected to help stabilize used-car prices further, especially as supply continues to rise. Despite these pressures, the used-car market has maintained a level of stability, which is reassuring for both buyers and sellers.

A More Equitable Market: Increased Consumer Choices

With new-car inventory on the rise and prices beginning to moderate, consumers are finding better opportunities to explore their options. Financing terms have also become more favorable, thanks to recent rate cuts. For many, this shift represents an opportunity to consider new vehicles over used ones, especially with incentives making the pricing gap narrower.

However, the stability and affordability offered by the used-car market cannot be overlooked. Buyers who are more price-sensitive or unable to find the right new car for their budget may find the broader selection of used vehicles appealing. The automotive market appears to be stabilizing, with brands finding a new equilibrium in managing inventory, pricing, and the launch of 2025 models.

MotorVero: Your Partner in Auto Financing

Whether you're buying a new or used car, navigating the financing landscape can be challenging. MotorVero stands out as a reliable partner for individuals seeking financing solutions. Their platform is designed to simplify the process of getting prequalified, making it easier for you to secure the best terms available. From flexible interest rates to transparent terms, MotorVero provides the tools and guidance needed to make informed decisions.

MotorVero also works closely with dealerships to ensure that customers have access to the best financing options available. Their partnerships with lenders allow for competitive rates, making it an ideal solution for anyone looking to finance their next vehicle. If you're in the market for a new or used car, consider getting prequalified with MotorVero to make the process smoother and more efficient.

Conclusion: Navigating the Shifts in the Automotive Market

The automotive market is in a state of flux, with supply surpluses, pricing adjustments, and broader economic factors all influencing buyer behavior. The new-car market is seeing price drops, largely driven by inventory surpluses, while the used-car market remains stable, offering attractive options for budget-conscious buyers.

The electric vehicle market presents unique opportunities and challenges, with new EV inventory expanding rapidly but facing slower sales, while used EVs become more accessible thanks to declining prices. Meanwhile, favorable financing terms following the Federal Reserve's recent rate cut are providing incentives for consumers to explore both new and used vehicles.

Whether you're considering a new or used car, MotorVero offers an excellent resource for financing, helping you get prequalified and providing transparent, competitive options. As the automotive market continues to evolve, having the right tools and information at your disposal is key to making the best possible decision for your needs.