A return to normal conditions in the American auto market is expected during 2024 according to a new forecast from Cox Automotive, with the upcoming twelve months “expected to be the best year for car buyers since the pandemic.”
The Forecast: 2024 report from Cox predicts stability for 2024 in most auto market measures, while noting the seller’s market of the past several years is rapidly giving place to a buyer’s market.
A major factor in the predicted normalization of the auto market is a return to robust production levels. Rather than roughly a million vehicles in dealer inventory at any given time during the period of the chip shortage, 2024 should see about three million vehicles on dealership lots. Overall sales should grow about 2 percent to 15.6 million vehicles for the calendar year.
The increased supply should help to keep prices under control despite demand, with incentives and discounts expected to remain high. Used vehicle sales will outnumber new vehicle sales by around two to one at an expected 36.2 million forecast for 2024. Certified pre-owned vehicle supply is depleted, so only about 2.7 million of those sales will be certified, though this is up 3 percent year-over-year.
Cox analysts believe the electric vehicle (EV) market will also continue its growth, though consumers are also likely to continue being wary of the new technology. More than a million EVs were sold during calendar 2023, and sales levels should notch even higher during 2024, making the upcoming 12 months what the firm calls “the Year of More – more models, more incentives, more discounting, more advertising, and more sales muscle.”
When EVs are added to hybrids, the electric or partially electric vehicles should make up about 24 percent of the auto market in 2024. EV leasing should increase and the used electric vehicle market is expected to grow rapidly.
Although wages will grow only slowly in 2024, combined with high interest rates and a weakening labor market, all economic factors should still trend toward more affordable vehicles for ordinary Americans. Stability should replace wild price swings and constrained availability.
While the forecast is cautiously upbeat, Jonathon Smoke, the chief economist at Cox, cautions that the “past four years have been chaotic, even by auto industry standards.” He added that the chaos “shifted many normal seasonal patterns out of whack, which adds to the difficulty of forecasting what comes next.”