Is the Car Market Truly Returning to Normal? A Closer Look

The automotive market in 2024 remains unpredictable, with ongoing debates about whether it's really back to "normal." While inventory levels are improving, prices continue to be much higher than pre-pandemic levels. Let’s take a closer look at what’s happening in the market.

Inventory Levels: Stabilizing, But with Exceptions

Inventory levels in October 2024 are nearly identical to October 2019, with a current day supply of 81 days—just one day fewer than in 2019. However, key models like the Toyota Prius and several BMWs face stop sales and recalls, complicating the broader picture. Although some brands are catching up, dealerships are still adjusting to fluctuations in supply chains and consumer demand.

What About Prices?

Even though inventory appears "normal," prices are a different story. The average vehicle listing price in October 2024 is $47,800—up 2% from last year and $10,000 more than in 2019. The average transaction price (ATP) now sits at $48,319, far higher than pre-pandemic levels. Experts suggest that higher trim levels, fewer low-cost models, and manufacturer pricing strategies are keeping prices elevated.

Incentives: Slowly Improving

Incentives, the discounts dealers offer to clear inventory, remain below pre-pandemic norms. Currently, incentives account for just 7.3% of the average transaction price—up from 2% in 2022 but still below the 10-11% range of 2019. While dealers are feeling some pressure to move inventory, incentives are mostly focused on higher-end models, leaving budget-conscious buyers with fewer options.

The “New Normal” of Car Prices

The reality for consumers is that the car market may never return to pre-pandemic pricing. Higher trims and luxury features are becoming the standard, while affordable entry-level models are increasingly rare. Automakers are prioritizing profit margins, and dealerships are maintaining higher prices, creating a “new normal” where supply and demand aren’t the only factors driving costs.

Stellantis: Leading the Way in Inventory Management

Stellantis has been proactive in reducing inventory, with a goal of bringing U.S. stock below 350,000 units by the end of the year. The company has aggressively discounted both 2023 and 2024 models, making it an attractive option for buyers seeking deals—especially on 2023 vehicles.

Brands Lagging in Inventory

While brands like Dodge and Chrysler have made progress in lowering inventory, others like Toyota, Lexus, and Honda still struggle with low stock, leading to higher prices and fewer discounts. On the other hand, brands with high inventory levels, such as Jaguar and Lincoln, are offering significant discounts to move excess stock.

Consumer Sentiment and What’s Next

As we enter the final months of 2024, consumer sentiment is improving, driven by hopes of more stability after the election and a possible drop in interest rates. However, until car prices come down, the market will remain challenging for many buyers.

The key takeaway is this: inventory may be stabilizing, but prices remain stubbornly high. To find a deal, focus on older models or higher-trim vehicles, and don’t hesitate to negotiate.