There’s been a lot of movement in the car market this year and not all of it has been in favor of new car buyers. I think we’re now at an inflection point where there’s a lot of inventory and a stubbornly high average transaction price, which means the only lever left for some dealers is cash on the hood.
This Morning Dump is going to be, mostly, about the state of car sales and what you need to know as a consumer to be prepared to get a good deal if you want something new. The when is important, and it might be now, but the where is just as important, as not all dealers are going to be equally as enthused about forking over money.
And speaking of forking over money, Republicans in the House of Representatives passed a bill stating that federal tax incentives can’t even go to batteries built in America, if those batteries use Chinese battery technology. The timing of that is interesting given that GM is considering buying tech from China’s CATL.
There are many dull cars, but few dull moments around here lately. Tally ho.
There Are Still About 3 Million New Cars For Sale In The United States
There are roughly 333.3 million people in the United States right now. That’s an estimate, but it’s a good number for us because there are approximately 3 million new cars in the inventory of car dealers according to Cox Automotive. The math is pretty easy from here.
As of August, there was roughly 1 new car for sale for every 111 people. That’s a big increase over last year, when production hadn’t quite caught up post-pandemic and there were only approximately 2 million cars for sale.
We showed a version of the graphic above yesterday, but you can get a good sense of which brands are and aren’t moving cars quickly this year. The average Days Supply (i.e., how long it would take to sell all the cars on the lot) was 68 in July and climbed up to 72 in August. Generally, you want to be left of that green line, though brands like Land Rover and Ferrari are doing well, so it’s not a perfect measure.
Here’s Automotive News with an overall take:
Asian automakers continued to have the leanest supply levels, Cox said, while Ram, Lincoln, Dodge, Jeep and Mini have at least four months of supply on hand.
Among the seven automakers reporting monthly sales and inventory, Ford Motor, Volvo, Toyota Motor North America and Hyundai-Kia saw days’ supply increases in August from the previous month, according to the Automotive News Research & Data Center, while American Honda, Mazda and Subaru saw theirs shrink. Toyota remained the only automaker among the seven to report less than a one-month supply.
So we know some dealers have a lot of cars and some have fewer. Does that mean everyone is going to be offering great incentives? Not quite.
Where The Good Deals Probably Are
Here is another fun graphic from Cox/KBB, showing the average transaction prices (ATP) of cars being sold in blue and the % of ATP given away in incentives (ATP doesn’t include incentives, FYI). There’s really no clearer way to understand the overall car market than this. You can see the large drop in incentives and quick rise in car prices that happened because of the pandemic slowdown/Trifmlation. With less inventory, automakers had no reason to give breaks on cars and found as many ways as they could to raise prices.
This is going in a better direction for consumers now, though incentives haven’t reached their 2019 peak of 10.9%, and average prices, while they’ve stabilized, aren’t going back down to pre-pandemic levels. Some of this ATP increase is likely due to product mix, with people desiring bigger/nicer cars. Some of this might be that everything is more expensive and so the cost of making cars is going up. Some of it might be that automakers found an excuse to increase the costs of their cars and just don’t want to lower prices because they got addicted to those sweet, sweet margins.
In theory, looking at this you’d think that it’s been an increasingly great time to buy a car. And, yeah, if you’ve got cash to buy a car and you’re willing to get a Volkswagen Atlas instead of a Toyota Highlander it is a great time to get a deal. If you have to finance one, that’s another story, as interest rates have remained stubbornly high.
The industry in general, though, is pushing incentives, and they’re up about 49% year-over-year (they were up almost 60% year-over-year last month) to 7.2% of ATP.
So where are the deals? From KBB:
With new-vehicle inventory in early August higher by more than 40% year over year, consumers enjoyed more choices last month and, in many cases, notably higher incentive levels. Incentive packages for vehicles from Chrysler, Ram and Jeep all shifted from below the industry average in July to above the industry average in August, as many Stellantis dealers work through higher inventory levels. (Incentives for Dodge-brand vehicles declined month over month in August, falling from 6.9% of ATP to 5.6%.) Buick, Lincoln, and Mitsubishi posted notably higher discounts in August, while Nissan and Infiniti continue to offer substantial incentives as well.
In August, Porsche, Land Rover, Toyota and Lexus continued to offer the lowest incentives in the market. These brands also consistently carry inventory levels far below the industry average.
“In the face of a sluggish sales pace – 15.1 million in August – more dealers are pulling the only lever they have: higher incentives,” added Keating. “This shift to a buyers’ market is good news for consumers but certainly impacts dealer profitability. Automakers are coming to the table with more incentives, but credit remains tight, putting more pressure on dealers to get creative with additional discounts and financing, affecting the bottom line.”
Again, refer to the chart of inventory above for a very general sense of where to get a good deal. You can also check out this chart to see which automakers have seen the biggest ATP drops year-over-year. Nissan/Infiniti and Buick/Lincoln/Mitsubishi are near the top, though Stellantis is finally joining the party.
Lower pricing and higher incentives aren’t the only lever automakers have to pull. If you want to lease a car and make an EV work those are the best deals right now and it’s not even close. As CarEdge is reporting, 0% financing and lower financing in general are starting to become more common. Deals include 0% financing for the new F-150 and Expedition for 36 months and the Mach-E for 72 months. Mazda will do 0% financing for 36 months on the CX-30, CX-5, and Mazda3 and Jeep will do the same for Wrangler and Grand Cherokee models.
The best non-EV deals are probably the Nissan Titan and Volkswagen Tiguan as both can be had with 60 months of 0% financing for qualifying buyers (which you have to be in order to access these deals). The best, though? If you actually want to buy a Subaru Solterra (definitely lease, not buy one) they’ll let you have 0% financing for 72 months.
Republicans: No More Chinese Battery Tech
Republicans in the House of Representatives just finished “China Week” which, I just found out, was not about Uma from Descendants 2.
The ultimate result was the passing of “25 crucial pieces of legislation to protect Americans against the military, economic, ideological, and technological threats posed by the Chinese Communist Party.”
Most interesting to us will likely be H.R. 7980, or the End Chinese Dominance of Electric Vehicles in America Act of 2024 Act. Currently, for a battery to qualify for an EV tax credit the battery can’t be made in a prohibited foreign entity like China or Russia and can’t contain too many source materials from those prohibited foreign entities.
The technology? That’s not included in the Inflation Reduction Act, which is why Ford has been planning to build a plant in Michigan to build batteries using technology from China’s CATL, which is the biggest battery maker in the world (though that whole plan hasn’t gone so well lately).
It’s hard to argue that China is not ahead of us on battery technology, at least when it comes to the current era of lithium-based chemistries. Republicans (and a few Democrats) don’t love the idea of a joint venture between a Chinese company and a domestic manufacturer and are using this bill to target those entities.
Of course, there’s still a Democratic Senate and President, so this bill is probably DOA, as the South China Morning Post reports, but there was still quite the debate:
A debate emerged among legislators from Michigan, the base of US auto making. Representative John Moolenaar, the Republican chair of the House select committee on China, argued that “the American people do not want CCP-affiliated companies setting up shop in their towns”, while Representative Debbie Dingell, a Democrat, contended that the bill would “lead to American job losses” and make it “harder for American companies to compete”.
Representative Judy Chu, a California Democrat, raised concerns about a provision in Miller’s bill that expands the list of entities restricted from receiving tax credits to include firms owned by “a citizen, national or resident” of China.
“This bill includes a harmful provision that would target immigrants who came to the United States from an adversary country, but who themselves have nothing to do with their governments of origin,” Chu said.
The impending election will likely impact whether this ever sees a vote.
GM In Talks To Buy Batteries With Chinese Tech
Bloomberg is reporting that GM is in talks to buy batteries from Japanese firm TDK, to be built in America, using some tech from China’s CATL:
Under the terms of the deal, TDK would license technology from CATL — the world’s biggest maker of EV batteries — to make lithium iron phosphate cells, the people said, similar to existing CATL partnerships with Ford Motor Co. and Tesla Inc. GM doesn’t plan to take an equity stake in the venture, one person said.
Such a technology licensing arrangement may help avoid scrutiny by US lawmakers and the Biden administration, who are wary of collaboration with China on key strategic technologies including EV batteries.
Talk about good timing.
What I’m Listening To While Writing TMD
The Roanaissance got a little more real this week at the MTV Video Music Awards with Chappell Roan doing “Good Luck, Babe” in front of a flaming castle. Is this Roan torching the fairytale idea of conventional sexuality? Maybe! I’m an old man, what do I know? It’s a great song.
The Big Question
Are you more or less likely to buy a new car now than you were a year ago? Why?
Top photo: DepositPhotos.com
Less likely than a year ago. There would need to be a ton of cash on the hood to get me to even look at this point. The economy is getting softer, money is expensive to borrow.
The brands that have a ton of unsold inventory are pretty much the usual group of suspects here. Same as it ever was.
But design, and the ability to build it right has a lot to do with this equation.
Then again some of these manufacturers have no desire to do shit the right way.
There’s a reason Toyota has the best numbers here. Or maybe several reasons.
On another note, someone stole and ate my dog, cat, and pet rock…
Fuck the GOP. There’s no fix for racist, ignorant, lying, stupid people.
Just reporting the truth here…
“But vote for me, because I have a concept of a plan,” right…
Go back to Jalopnik. We don’t need your political rhetoric here.
Thanks Bill. Since at least 1/2 of the article was related to the machinations of politics, somehow it just feels like a comment may be warranted, despite your protestations.
May I eat your dog first?
Have a nice whatever.
Honestly all of the new cars seem to come with too many compromises. I would have considered buying new if I could find something I wanted.
When I look at how big and heavy everything is, all the compromises in user interface, infotainment, data spying etc I just can’t. And all of this is really recent, like 2021 or later.
Prior to that general time frame cars were still very big and heavy but it’s been ramped up a notch.
My wife has been wanting a Porsche Macan ever since I had one as a loaner in 2018. We drove the new ones. They are objectively still great cars. Fast, relatively nimble, handle great for what they are. But my god it really felt like a tank!
So we found a 2017 model at a Cadillac dealer and was much more like we remembered. It was in such good shape but reeked of cigarette smoke.
So, off to Autotrader and Porsche’s used inventory search page;
I was shocked to find they have massively expanded the CPO program and you can get much older cars with much higher mileage with manufacturer backed warranties for 2 years. There was even a Macan Turbo with over 90K miles offered as CPO. Amazing.
So I got a 2018 CPO with about 50K miles on it for less than a new Camry.
I would get a new car. I’m not sure who they’re building the new ones for, but it’s not for anyone that really pays attention.
Nope! Plan on keeping current car and truck for ten more years!
Same. It will be 25 years old then.
But it’s a Toyota.
New, no. Used BEV due to incentives and rebates, yes.
Less likely. Too many overly complex engines, stupid to infotainment screens, and lack of old school basics.
What? You don’t want a 3 cyl turbo to haul your 3 ton piece of shit around? /s
I understand totally.
I’ve been shopping and just drove a 3 cyl turbo for the first time this week. It was….meh. I gave it back.
Probably a wise decision.
Spent $27K on a new roof last year. So, no new car this year, not even “new to me”.
Ugh, part of what made Chinese technology advance so quickly is that they invited foreign companies to set up factories and train Chinese workers. Why stop US workers from getting trained by Chinese companies? Yeah, maybe there is some IP theft involved, but I don’t believe the republicans would care that US citizens are stealing Chinese technology. The republicans have been packing the courts, maybe if Chinese companies bring a case to a US court, the US court could behave like the Chinese court and say, “meh.”
More like China gives zero regard to any international intellectual property laws, so at any given point in time, China will naturally be at worst tied for the lead in commercial technology development.
SIGH…..No fucking politics. China is our ENEMY. Our uniparty has green lighted this bullshit for decades. Stop trying to pin it on one party. They are all culpable. What does “packing the courts” have to do with this conversation. Please enlighten me…
I would say adversary is more accurate an enemy. We’re not trading bullets yet, just rhetoric and intense competition.
You’re right, I got too political, I’m sorry.
Eh, just accuse China of having stolen the tech, half ass some evidence, ignore their complaints as long as possible and litigate them to death after that.
I’m ticking over into 8 months of unemployment this very day, so I’m gonna say less likely right now.
This is a good time to look, if you have not been. I’ve seen a surge in job offerings since after Labor Day, with 4 in-person interviews over this and next week. If you aren’t, try again. Timing is very good.
Believe me, I am hustlin.
Because I have my priorities straight, I’m motivating myself less by “unfuck your debt crisis!” and “pay your bills!” than by telling myself there will be an orange Blackwing somewhere for me in 2025, and some Z4 parts besides. I need a job and I need a good thing to look forward to, not just “wow here are a lot of problems you have, have fun spending two years solving those problems.”
Glad to hear. Keep us posted and good luck!
I wish you all the best amigo.
I was looking for a Bronco for my dad and there was one in Oregon that fit the bill. Red 2 door Badlands. It is a 23 and MSRP is 62k. They had it down to 49k a few weeks ago, but this week it’s back up to 56k. I called and the sales manager told me 56k is the correct price. I asked him about the 49k price and he told me that they can’t sell it that cheap. I told him, you are correct, you didn’t sell it for 2 weeks at that price. Not sure what they are going to do, but this seems like an issue a lot of dealers have coming up as the MY25 start to ship. Who is going to pay anything close to MSRP for a 2 year old car. Death spiral?
Not ready for a new car yet, but Jeep not offering orange as a Wrangler color at the moment removes any temptation to jump in.
I bought one new and one used less than 6 months apart this year, due to weather related loss and a newly minted teenage driver. I think I’m done for a while unless my wife wants one. It’s her turn and she by far drives the most miles of anyone in the family. She’s thinking next year at this point. So if she wants one, she gets one, new or used, this year or the next.
My wife wants to swap her CRV hybrid for an EV. The likelihood of that now is more than it was a year ago but still not enough to actually follow through on it yet.
I got a PHEV a few months back and my wife if very jealous of plugging in and avoiding the gas station. We plan to jump to a EV for her next car when the time is right. With the deals on EVs right now we get tempted a lot.
Just bought a 2022 Ford Maverick Private party. I am good for a while… Now my wife’s 2014 CRV will be the next to get traded for a CRV Hybrid. Will probably wait 2-3 years (maybe) and find one private party (no sales tax in AZ on private party transactions).
Unless I find an EV at exactly 35k there’s zero interest in taking on their interest payments.
new car? no. Bought a used 2023 EV with low low miles
I am more likely to buy something new now that ADMs are basically gone from the stuff I want to buy and rates will probably start dropping soon.
With winter coming up though I’m not in a rush and will probably wait until the colder months to try to get even a better deal.
I want a new car, but can’t bring myself to paying so much. I’m a cheap bastard but want new.
Mitsubishi might still have a few Mirages left…
A year has made no difference. No new car.
I bought a new car last year but it’s a VW so it pisses me off almost as much as it makes me happy. So we’ll see. I’m hoping to have it for a few years and then get something like a Rivian R3X and sell my very low mileage manual transmission enthusiast car for BANK.
Long live Chappell Roan!
Given my 2022 CX-30 only has 15k miles on it, and I’ve spent about 8 hours sound deadening the entire car, less likely. It’s so quiet and comfy, and almost paid off, there’s no chance I’ll be replacing it for at least the next 5 years, if not longer.
I pulled the trigger on a Model Y back in May when Tesla offered good financing deals. It’s been fine.
I love the idea that the buyer has so much leverage–so much POWER–in this scenario, that you would unwrap the sandwich and lick off the mayo without breaking eye contact with the sales guy.
Still paying too much, IMO
Brutal but probably not far from the truth. They wanted the Hornet to be a hybrid crossover… for performance.
That’s not mayo!
I consider myself very anti-CCP – I will never buy a car with an L VIN – but banning use of the best technology not only makes American cars worse in the short term, it prevents our engineers and scientists from learning the state of the art. The concept of “ideologically unacceptable technology” belongs in the Soviet Union with Lysenkoism, not in the USA.
I’m afraid we’re sprinting right into the same traps that doomed the Soviet Union, except this time it’s the same populists screaming about being “anti-communists” leading the charge into mediocrity.
It seems like making it easier/more attractive to invest in R&D to catch up to their technology would be a much better solution.
It seems like making it easier/more attractive to invest in R&D to catch up to their technology would be a much better solution.
Or just steal the tech outright.
I see both sides, but these bans are giving me the same vibes as the chicken tax preventing foreign trucks and vans inside the US. Eventually, the OEMs will either find a clever loophole (see Subaru Brat, Ford Transit Connect), will build a factory here (See Toyota, Nissan), or will keep the good stuff to themselves. Still unsure whether we win or lose long-term, but in the short term, we low key suffer.
We are at the point that we may jump on a new car for my wife in the next year or so if the deal is right….but unfortunately and unsurprisingly the best deals aren’t on the cars we actually want. We’re getting a hybrid, Asian family hauler of some sort and Toyota’s are still unobtainable unless we want to pay over asking (NO!), and the CX90/Santa Fe are dealing with a world of issues right now so I’m not exactly thrilled about the thought of buying either.
Alas, this is why Toyota can’t keep cars on their lots. They don’t have very much that’s necessarily class leading, but they do have hybrids and those hybrids don’t have issues. As far as I go the Kona N will remain my car for the next several years.
You need a three-row?
Probably. We’ve got kid 1 now, a dog, kid 2 remains in the plans, and we do a decent amount of road tripping since her family is 5ish hours away. We’ll need the extra space, and she’s still anti minivan despite my best efforts.
Minivans are soooo cool! They’re like like the private jets of the highways! I can’t believe OEMs have brainwashed (almost) the entire American public into believing that SUVs are cool and minivans are not. 🙁
(Not knocking your wife at all. We are all complete suckers for the marketing gods, whether we believe it or not.)
I still can’t get over how awesome my new (to me) Sienna is.
Unless you’re towing a boat, a 3 row SUV makes no sense to me. Aside from towing literally every other metric is worse.
Has she tried loading the baby into the second row of a minivan vs of an SUV? Tremendous difference.
Even better, when your kids get old enough to get in and out of the car themselves. Power sliders are excellent.
Time to break out the inception equipment to whip up a sweet, glorious minivan dream.
Inception or Conception machine?
Consider the Sorento PHEV?
The post refresh one is so ugly 🙁
I would consider looking farther from home, as they seem to transact at MSRP or better in the Midwest. Maybe the asking prices online are fake? I’m not actually in the market.
I do know a one way plane ticket is a lot cheaper than an ADM.
Oh for sure. That will likely be in the cards, especially if the hybrid Highlander remains as inevitable as it currently feels.