Dealerships have seen no shortage of change in sales trends as markets continue to shift in a post-pandemic world. And we can expect to see more in the year ahead.
Swings in both supply and demand, changes to inventory and interest rates, the continued interest in electric vehicles and the growth of online purchasing will all shape auto sales trends in the coming year. Savvy dealerships stay on top of these trends and adjust in real time.
"After four years of anything but normal, Cox Automotive is expecting balance to return to the U.S. auto market,” Jonathan Smoke , chief economist at Cox Automotive, wrote in the company's 2024 Forecast. "And that will clearly be better for American consumers and fleet buyers who find more choices, better deals, and better access to online buying tools. In fact, in many ways, we are expecting 2024 to be the best year for car buyers since the pandemic."
‘Farewell to the Seller’s Market’
One major change is that the seller’s market created by the pandemic, in which supply chain shortages combined with lower inventories to create scarcity and drive prices to record levels, is continuing to ease, according to analysts. Many expect a buyer’s market to solidify and become the new normal.
“Affordability will limit what is possible in both the new- and used-vehicle markets, but affordability will continue to improve, as household incomes increase, loan rates stop increasing (and maybe come down some), and vehicle prices in new and used react to the market’s undeniable downward price pressure,” Smoke wrote.
Cox analysts expect new vehicle sales to increase by less than 2% to about 15.7 million sales in 2024. Used vehicle sales will increase less than one percent, with total sales of about 36.2 million, with retail used-vehicle sales at 19.2 million, up 1% over the previous year.
“We are expecting certified pre-owned (CPO) sales to outpace used-vehicle growth and reach 2.7 million units, a 3% increase from 2023,” the report said. “Demand is there, while product availability is limited by the lack of production from 2020 through 2022.”
Overall, the report said, “we officially bid farewell to the seller’s market.”
Electric Vehicle Sales Trends
Electric vehicle (EV) sales topped the 1 million mark for the first time in 2023, but still fell short of some analyst’s expectations. Cox analysts are expecting 2024 sales trends to top that number and set a new record, accounting for more than 10% of all vehicle sales, the report said.
“The industry will fully come to terms with the fact that the average consumer has to be sold on the merits of going electric, and many won’t be easily convinced,” Smoke write. “But with more models, more incentives, more discounting, more advertising, and more sales muscle, we still believe more sales will follow.”
EV sales are driven in part by municipal, state and federal government goals to lower carbon emissions on a rapid timeline. However, there are several barriers that go beyond the sales price.
For example, some EV buyers experience “range anxiety,” the fear that batteries will not easily get them where they need to go. In addition, the U.S. charging system is still very much a work in progress, according to analysts.
There are roughly 140,000 EV charging stations in the United States, according to a report by S&P Global Mobility. The organization predicts that will have to grow eightfold by 2030 in order to support robust increases in sales. While home charging is increasing and the US. federal government is investing billions of dollars in public charging infrastructure, whether the network can keep pace remains an open question.
“The transition to a vehicle market dominated with electric vehicles will take years to fully develop, but it has begun,” said analyst Ian McIlravey. “With the transition comes a need to evolve the public vehicle charging network, and today's charging infrastructure is insufficient to support a drastic increase in the number of EVs in operation.”
Online Sales May Grow
Some analysts say that online car sales, in which buyers shop, choose, finance and purchase a car online—sometimes without a dealership experience—will continue to grow, and could force dealerships to adapt.
Born in the pandemic, when online purchases offered access to more inventory with a contact-free process, the process has continued to be popular in the post-pandemic world.
“This trend encompasses used and new cars, with online platforms offering convenience and transparency,” Analyst Sarwant Singh wrote in Forbes. “The automotive landscape is headed towards a future where fully online sales contribute significantly to total new car sales.”
A survey by Progressive insurance in 2022 showed that 78% of those who bought a car online found it a “highly satisfying experience,” compared to just 58% who said so after buying a car from a dealership.
“Online car buying has become an increasingly viable option that more and more Americans are embracing,” the report said. “With online car buyers finding satisfaction with the experience, it seems likely that more consumers will look to the web when it's time to buy their next vehicle.”
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