Even if you’re not a gearhead, you likely know the vehicle market has been experiencing some dramatic shifts over the last few years in response to macroeconomic conditions. The auto industry has gotten past some of the biggest constraints that pushed prices up a few years ago, but consumers still face some affordability challenges. It’s a reminder that it’s worth keeping up to date on what’s happening just in case you find yourself in the market for a vehicle.
We’ve compiled some of the latest auto industry news and sales data from Q2 2024 to help you keep a pulse on the market. Let’s dig in:
Notable Auto Industry News
First, let’s cover recent developments around the auto industry beyond the typical updates. Right at the tail end of the quarter in June, hackers launched a ransomware cyberattack on software that over 15,000 car dealerships in the U.S. use, demanding millions of dollars in payment. Auto brands and dealers had to find alternative solutions in the meantime including manually completing paperwork and vehicle registrations. The software outage could impact delivery of vehicles at dealerships as well as sales. Sources report that CDK paid the ransom to end the outage.
This is an unfortunate reminder about the importance of cybersecurity. Take some time to go over security best practices to safeguard yourself against the risk of spam, scams, and fraud.
The second bit of notable news is that the average age of vehicles in operation hit a new record. Passenger cars are now an average of 14 years old while light trucks have reached an average age of 11.9 years old. Over the past decade, passenger cars have climbed over two and a half years in average age.
S&P Global Mobility notes that it’s not just the percentage of cars that are older, but also the sheer numbers. In 2019, 98 million vehicles on the road were 0-5 years old. In 2024, there are just 90 million vehicles 0-5 years old on the road.
It’s clear: cars are staying on the road longer. After the pandemic hit, passenger cars climbed in average age on the road; many people worked completely remotely, or more days per week from home. Millions of drivers could extend the life of their vehicles as they put fewer miles on their cars. However, consumer behavior plays an additional role. Many people are choosing to drive their cars as long as they can rather than trade in for something newer. An editorial article from the Wall Street Journal profiles people who are driving older cars intentionally – including one man who estimates driving the same pickup truck for 24 years has saved him $100,000, and a couple that chose to replace the transmission on their car when normally they would take that as a sign to trade it in for a newer vehicle.
With vehicle prices and financing as high as they are (keep reading), it’s clear why people are choosing to hang onto their vehicles for longer. If you’re rocking an older car or on the fence about if you should get something newer, it can be helpful to remember that more and more consumers are not trading up until it’s a necessity.
Q2 2024 Auto Market Sales Data
Now, let’s cover the rate and type of car sales this past quarter: new, used, and electric.
Auto industry source CBT News reported, “an estimated 4.1 million new cars and trucks were sold, a slight increase of .1% compared to the same period in 2023.”
What types of cars were the top sellers? Car and Driver reported that electric SUVs and small cars in general had big gains. For specific models, the Nissan Ariya, Chevrolet Colorado, GMC Canyon, Ford Mustang, and Mazda CX-50 all had surges in sales performance as well. Toyota’s SUVs are competing against one another with consumers opting for its larger, newer, and slightly higher-priced Grand Highlander model.
Electric vehicles are making up a notable share of car sales gains. Cox cited Kelley Blue Book and reported that in Q2 2024, EVs hit a new record and grew 11.3% year over year, and 23% from Q1 2024. Some brands are seeing EVs take up a larger share of their units sold: for Cadillac, over 18%; BMW, over 15%. Honda, Acura, Toyota, and GMC are at the other end with under 2% of their Q2 vehicles sold being EVs. Tesla, nearly synonymous with EVs, for the first time makes up less than 50% of all EV sales.
What’s driving the surge? EVs are becoming more available and affordable. The New York Times reports this is due to more efficient manufacturing and lower battery prices. Combined with more charging availability, EVs are better able to compete with gas cars in terms of price and range, making them a more realistic option for more consumers.
For used cars (of any fuel source) Cox Automotive found that used vehicle sales were down 5% from May to June but are up 3% compared to the same time one year ago.
Q2 2024 Auto Costs and Financing
The cost and financing of vehicles plays a major role in auto sales. The New York Times reported that as of May 2024, the average price of new vehicles sold in the U.S. was $48,389, but this is slightly down from the record of $50,000 set at the end of 2022.
Edmunds reports that the average monthly payment for a new car bought in Q2 2024 is $740 and $552 for used, both up less than $10 from the prior quarter. The average down payment for a new car was $6,579 and $4,140 for used. Interest rates continue to pose challenges. The average Annual Percentage Rate for a new car was 7.3% and 11.5% for used. Consumers are stretched financially, taking on longer loan periods, and 17.8% of consumers have a monthly car payment over $1,000. U.S. News and World Report shows even those with excellent credit are not getting much of a break on auto loans.
Fortunately, there is some good news: for used (or pre-loved, whatever terminology you prefer) vehicles, prices continue to drop. Cox’s Manheim Used Vehicle Value Index tracks wholesale used-vehicle prices and reported that as of Q2 2024, prices are down just shy of 9% compared to one year ago. Seasonally adjusted, prices on used cars were down 0.6% from May to June 2024.
Conclusion
It’s been an eventful past few months in the auto industry. Auto loan rates and new and used vehicle pricing are especially important for any potential car shoppers to know to help guide your research and shopping process. While new vehicle prices climb, some welcomed news comes as used vehicle prices are decreasing, and electric vehicles are becoming more affordable for those who want to explore that option. While trucks are the most popular vehicle in the U.S., electric SUVS and small cars had their moment in Q2 2024. Whether or not you’re in the market for a new (or new-to-you) vehicle, it’s helpful to stay informed, as transportation is a sizable portion of most household budgets.
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