2024 Forecast – Lower Car Prices

In May 2022, we wrote about how used car prices were finally starting to cool off. At the time, dealerships were experiencing shortages. New and used cars were going for above MSRP. Dealerships weren’t offering any discounts because inventory was so limited and demand was so high. Since we wrote that article, used car prices have continued to fall. From when we wrote that article in May of 2022 to today, used vehicle values have gone down by nearly 10% according to industry experts. Meanwhile, new car prices are almost completely flat over that same time period.

Why do used car prices keep going down

Prices skyrocketed in 2020 as the supply chain struggled to fulfill demand. Through 2021 and into early 2022, prices soared for both new & used cars as people who held off buying during the pandemic started to buy. This was a wild time. If you started a lease in 2020 or earlier, the value of your car had gone up so much that you could buy out the lease and sell your car to a different dealership for a big profit. People who bought regular daily-driver cars pre-pandemic suddenly found themselves in a situation where their car was worth more than they paid for it years prior.

What’s happening now?

New car prices have seemingly leveled off. Over the last few months, there has been a significant increase in dealers offering promotions again. 0% interest rates on new vehicles are even starting to come back on select models. In the last few months, promotional offers have made a big comeback! If you’ve been holding off on buying a new car, now might be your time to jump in and lock in a low interest rate.

What to expect in 2024?

As you might have guessed, our guess is as good as yours. We don’t have any special insight into the future. However, since we were right in our 2022 blog post – I’m going to make a prediction for 2024 as well. In 2024, dealerships will offer more promotions than we saw in 2023. This will lead to increased new vehicle sales. The used vehicle index will continue to fall, as buyers opt for new cars at low [or 0%] interest rates, rather than lower price tags with higher interest rates. The higher rates on used cars compared to the lower rates on new cars will further drive people to buy new. Since most folks can’t afford to buy used vehicles in cash, the gap between new and used car prices will get wider.

If you’re buying a new car

– 2024 will be your best buying opportunity so far this decade.

If you’re looking to sell your car

– you’re likely going to be disappointed by your trade-in or KBB value

If you’re buying a used car

– Expect a great deal if you’re buying in cash. If you’re looking to finance, expect the interest rates to be so high that you consider buying new instead.