One thing: The average car costs $47,000
One thing: The average car costs $47,000
One thing you need to know about market movers and shakers, plus a handful of headlines.
One thing: The average car costs $47,000
One thing you need to know about market movers and shakers, plus a handful of headlines.
![](/sites/default/files/styles/jpg_png_optimize/public/image/2024-07/The%20Currency%20graphics%20%2814%29.png?itok=fLu0NpLy)
One thing moving markets
…is that the average listing price for new vehicles is $47,455, but many car prices are shifting down, with used car and truck prices decreasing 9.3% in May, according to the latest Consumer Price Index (CPI) with new vehicle prices decreasing 0.8%.1 High inventory levels have still led prices to fall for eight consecutive months.2
The average car buyer saved approximately $3,200 through incentives in May – the highest level in two years. After running hot during the pandemic, car sales have cooled, and inventory is plentiful. This has inspired sellers to offer more incentives for potential buyers, shifting the balance of negotiating power.
Auto sales hit the brakes
In the second quarter of 2024, Cox Automotive reported 4.1 million new cars and trucks sold overall.3 This was a modest 0.1% increase from last year, but a significant slowdown from the 7.9 million vehicles sold in the first quarter.
General Motors and Toyota were among those reporting positive results. Toyota drove a 9% increase in sales, and GM was up 0.6% compared to last quarter.4
For the entire market, Cox estimates that 15.9 million vehicles will be sold in 2024, an increase from the 15.5 million last year, but still notably below pre-pandemic levels.
Pricing pressures
Pandemic supply chain disruptions created a historic price surge for used vehicles in 2021. But since then, costs have trended considerably lower. At the end of 2023, used-vehicle prices were down 7.0% year-over-year, though they remained more than 30% above pre-pandemic prices.5
The not-so-electric EV market
If most car prices have been rolling downhill in neutral, used electric vehicle (EV) prices have put the pedal to the metal, according to a recent study.6 Over the past year, used EV prices declined by 30-39%, compared to just 3-7% for used gasoline cars. The average used EV price in May 2024 was $28,767, down 29.5% year-over-year, whereas the average used gas car price was $31,424, just a 6.1% decrease.
The EV tax credit, which only applies to new electric vehicles, offers buyers up to $7,500 off the ticket price at the point of sale, which may incentivize people to go for new EVs.7,8
Inventory insights
The trend in vehicle sales may be a classic case of supply versus demand.
At the start of May, new vehicle inventory was estimated to be 2.89 million, more than 50% higher than last year.9 That excess supply has kept prices sedated and will likely continue to do so in the near term, especially when 2025 models are added to this already-saturated supply. Excess inventory is even leading manufacturers to adjust production volume.
This can spark a buyer’s market. In the second quarter, these deal-sweeteners rose to an average of 6.7%, or approximately $3,200 in value, the highest level in two years. Higher inventory means consumers have an abundance of options, so dealers are pulling out all the stops to drive business — which translates to more savings opportunities for prospective buyers.
And a few top headlines
Uber is offering 175 people in seven U.S. and Canadian cities $1,000 to ditch their cars for a month as part of a new challenge.10
- The five-week trial will run from July 22 to August 25 and is to "help reduce personal car ownership" and switch to "a car-light lifestyle." The company is accepting applications through July 7th.
Waymo offering driverless car services in San Francisco.11
- Those not ready to ditch the wheels can take a spin in a robotaxi whenever they like. Riders previously needed to be approved from a waitlist.
Ford’s chief executive says it’s time for America to “get back in love” with smaller cars and is ready to put capital back into smaller EVs.12
- The average weight of a new vehicle sold in the US last year was 4,329lbs (2,000kg) – an increase of 1,000lbs (450kg) from 1980.
Look for next week
The Consumer Price Index (CPI) for June will be released on Thursday, July 11th.
In the Federal Reserve’s quarterly economic projections released a few weeks ago, central bankers estimated just one interest rate cut this year, leading markets to reconsider the possibility of higher-for-longer interest rates. However, following the latest Core PCE report — the Fed’s preferred measure of inflation — investor confidence is building back up.
Core PCE showed inflation increasing as expected in May, with prices rising 2.6% annually, nearing the Fed’s 2% target rate. If this next CPI report shows another move close to 2%, markets may price in more cuts this year, despite the most recent projections. However, it’s important to weigh all possible outcomes. A negative print showing an acceleration in prices could solidify one cut for the year — or even put rate hikes back on the table.
Get financially happy.
Put your money to work for life and play.
1 BLS, “Consumer Price Index Summary,” June 2024.
2 Kelly Blue Book, “Inflation Buster: New-Vehicle Prices Continue to Trend Lower, Are Down Nearly 1% Year Over Year in May, According to Kelley Blue Book Estimates,” June 2024.
3 The New York Times, “Auto Sales Grew Slightly in Second Quarter,” July 2024.
4 Reuters, “GM's second-quarter US auto sales growth slows,” July 2024.
5 Cox Automotive, “Manheim Index: Used-Vehicle Values Fall Further in 2023, with Values Now Down 21% from All Time High Reached in 2021,” January 2024.
6 iSeeCars, “Prices of Used EVs Drop Below Used Gas Cars for the First Time,” June 2024.
7 IRS, “Credits for new clean vehicles purchased in 2023 or after,” June 2024.
8 U.S. Treasury, “U.S. Department of the Treasury Announces More Than $1 Billion in Upfront Savings for Consumers on Electric Vehicle Sales,” June 2024.
9 Cox Automotive, “Manheim Index: Used-Vehicle Values Fall Further in 2023, with Values Now Down 21% from All-Time High Reached in 2021,” January 2024.
10 Axios, “Uber challenge offers $1,000 to ditch car for a month,” June 2024.
11 Waymo, “Waymo One is now open to everyone in San Francisco,” June 2024.
12 The Guardian, “Ford chief says Americans need to fall ‘back in love’ with smaller cars,” June 2024.
RO3685524-0724
The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. No part of this blog, nor the links contained therein is a solicitation or offer to sell securities. Compensation for freelance contributions not to exceed $1,250. Third-party data is obtained from sources believed to be reliable; however, Empower cannot guarantee the accuracy, timeliness, completeness or fitness of this data for any particular purpose. Third-party links are provided solely as a convenience and do not imply an affiliation, endorsement or approval by Empower of the contents on such third-party websites.
Certain sections of this blog may contain forward-looking statements that are based on our reasonable expectations, estimates, projections and assumptions. Past performance is not a guarantee of future return, nor is it indicative of future performance. Investing involves risk. The value of your investment will fluctuate and you may lose money.
Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it authorizes use of by individuals who successfully complete CFP Board's initial and ongoing certification requirements.