Cox: Auto Sales to Rise Slightly in 2024
Interest rates and prices are still high, but falling, while demand will overcome a slowing job market.
Cox Automotive is expecting both new and used car sales to rise slowly this year as interest rates and inflation subside and joblessness numbers rise slightly.
“We expect slowing job growth, which means a weaker or less hot labor market, but not one with job losses that leads to credit stress or diminished vehicle demand,” Chief Economist Jonathan Smoke said.
In a webcast Monday, Cox Automotive forecast that new car sales will rise 1.3% to 15.7 million vehicles in 2024, after rising 11.5% to 15.5 million last year.
However, retail sales of new cars will be flat at 12.7 million as manufacturers sell more vehicles into the fleet market. Also, Smoke said, “Pent up demand has been exhausted and is challenged by affordability.”
Interest rates are still high, but falling. Smoke said they peaked at just under 10% for new cars in October and at 14.35% for used cars in November. Since then, rates have fallen by 25 to 50 basis points and Smoke said he expects rates to fall a full percentage point more through the end of 2024.
Total used car sales will rise 0.8% to 36.2 million vehicles in 2024 after falling 1.1% last year. Used cars sold by dealers will rise 1.1% to 19.2 million vehicles in 2024 after falling 0.5% last year.
Cox Automotive’s used car forecasts are slightly lower than initial ones in June 2023, when it forecast 36.4 million total used cars would be sold in 2024, including 19.4 million at dealerships.
But actual sales of cars and light trucks in 2023 outperformed Cox Automotive’s mid-year estimates of 15 million new, 12.4 million retail new, 35.7 million used and 18.9 million retail used.
Cox Senior Economist Charlie Chesbrough said new car sales ended surprisingly strong in 2023. Sales last year were aided not only by a return to normal supplies — aside from last fall’s UAW strike — but also by a return of incentives.
What had been a seller’s market since mid-2021 is now becoming a buyer’s market as manufacturers are ramping up incentives, Chesbrough said.
“We expect this trend to continue into 2024,” he said. “Lower prices and more flexibility is good news for vehicle shoppers and will support sales, but not necessarily good news for dealers.”
While supply issues are repaired for the new vehicle market, the damages will continue for used car sales, said Jeremy Robb, Cox Automotive’s senior director for economic and industry insights.
“We continue to feel the pinch of lower new vehicle sales from 2021 and 2022, and that’ll keep the supply for used units constrained,” Robb said.