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
Oh dear! I’ll probably not be buying another car in my lifetime. You can cancel my membership, if I no longer qualify for membership. I live vicariously through the Autopian. I’m 72 and I’ve got a 2004 Acura TL and a 2001 Highlander, both with below average mileage. They are fiendishly reliable. Between retirement and Covid, my maintenance costs are low. Insurance has gone up 50% because of other people’s fancy electronic cars. Maybe if I have a crisis or something that may change. I test drove a used Corvette for a friend. It was fun, but I kind of scared myself.
I’m maybe a little more likely to buy a new car next year since the Maverick is poised to be available in an AWD hybrid version, but probably not since we just bought the wife a new car last year and I bought a new-to-me toy for myself last year too.
15m / year
333m humans
One in 22 adults, geriatrics, and newborns will buy a new car. This is absolutely nuts to me.
Are you more or less likely to buy a new car now than you were a year ago?
No more, no less likely
Why?
Because my cars still work fine.
Also because $new car smell>>>>>$gasoline and insurance.
I think the main area Autopian is missing and most other sites is different markets. I live in a small rural area and our local dealership never was empty of cars. They never added a charge for rare cars. They could have sold their inventory to other dealerships for more but they sold for sticker and took care of their market. It is sad that so many sites only cover big cities.
Can anyone explain Ferrari having a 97 day supply?
I’m not likely to buy a new car within the next couple years. Both of our dailys are paid off, still in good shape, and serve their intended purpose. Maaaybe we’ll replace my wife’s car in a couple years after it turns 10, since she’s been wanting a better highway cruiser.
My house in VA looks like it will be sold beginning of Oct so I will most likely be looking at a new(ish?) car this year or early next. Still trying to decide what it will be.
I’d say I’m about equally likely this year as last. I don’t actually need one, but there are some modern features I like my current DD does not have and cannot easily be retrofitted.
Same amount of likely, I bought one of the last manual Honda Fits new right before the pandemic (literally the end of Feb. 2020) and plan on at least a few years of car-payment-free ownership before getting back in the market and there’s nothing that appeals to me now as much as it does.
Less likely because I bought a 2018 Sienna two months ago and I love it so damn much! Even more so when I found out it has both direct and port injection and a timing chain!
Oh..new car? Yeah, never.
I’m sorry, but I’ll take saving $10k+ for ‘other people’s farts’ every day of the week.
Even if “other peoples farts” was a actual thing a few bucks worth of enzyme cleaner would take care of it.
I’d buy a new car this year, but the dealers in Vegas still think it’s 2022. Every new car on every brand’s lot has a $4-6k ADM sticker for window tint and TruCoat and nitrogen-filled tires. Right now I’m studying the logistics of buying out of town.
Are those cars selling? If not you could always get some satisfaction pointing that out to the sales team.
I’m more likely for sure, might be buying one today as a matter of fact. There’s a couple reasons, but the most important one is I can’t hang on to my old one any longer. It needs….stuff, lots of stuff, and I don’t want to throw money at it. Prices have crept down to a point where I’m only slightly uncomfortable rather than terrified. Financing still isn’t awesome, but it’s a lot more palatable than it was a year ago. Dealerships are making deals too! Lots of ’24s on lots right now with ’25s arriving daily.
I’m more likely to have to buy a new car within the next year simply because my current daily is 19yrs old at this point and while I’m not worried or afraid of it falling apart, or really need a new car, it’s still 19yrs old and I’m just being realistic about it?
it would be a sad day, it’s still as reliable as ever and regular maintenance isn’t a problem.
Toyota having the lowest supply is insane considering the volume they sell at. They seem to have a bubble that will never pop with fleet sales and returning buyers
The Tundra and Tacoma (because they seemingly made it too expensive) are the only vehicles you can find on a typical Toyota lot. Everything else moves fast. Many of the hybrids are still working off waiting lists.
Equally likely to buy a new car as I was a year ago, which is to say zero percent. There’s nothing out there that I can afford that interests me, or could remotely replace my whole 6-car fleet, which is what I would have to be able to do to buy something new.
From a year ago to today I’m less likely, but that’s only because I just bought one less than a month ago. Fortunately incentives are back and I’m in the privileged position of being able to pay cash so the financing rates make no difference.
Accounting for inflation, this truck was actually quite a bit cheaper than my previous one, although part of that is opting out of some features I no longer wanted (or couldn’t get at all) on the new one. Even if I’d spec’d it as close as possible to the old one I think it still would have come in lower though.
However, I did have to shop around more because some automakers *cough* Stellantis */cough* still have a very inflated idea of what their vehicles are worth.
As of a couple days ago, much less likely. Because I just ended up buying a RAV4 Prime. On the other hand, I think it’s already worth more than I paid (CarMax wants MSRP on three-year-old models with 60k miles), so the right temptation could probably get me into something else.
Geezers! Is it worth getting on a waiting-list just to flip new Toyotas on Carvana/CarMax?
I doubt more than a few $1000 would be made in profit, which would be in exchange for hours and hours at a dealership…but I dunno seems tempting.
Well, I’m really only in the market for the new Z and BRZ/86. Local Nissan dealers are getting desperate to get Zs off their showrooms, many of them have marked * down* (yay!) their Zs up to 5-6 grand with some outliers. I’d still custom order one but I’d still try and leverage the fact that Nissan isn’t doing so good right now to get a price lower than the msrp
I suppose I’m always a little more likely to buy a new car than a year ago, as each year goes my, my fleet gets older.
But really, the only way I buy a new car any time soon is if something catastrophic happens to one of them and I’m forced to find a replacement.
ha ha
hahahahahahahahahahahahaha
haha hahaha hahahahaha
Good one, Matt. I have broken hoopties at home, I guess.
Unless a bunch of money miraculously falls in my lap or my mom takes pity on me again, that’s a no. Either way, the Lancer ain’t broke yet.
I’m far more likely to go with something old. What seems to be valued in new cars is anathema to what I like. Even the BRZ/GR86 has been infected with the active “safety” BS in the manuals (my ’22 doesn’t have it, which is no small reason I bought it).
I’d like to buy a new car, but there really is no competition for the Grand Highlander hybrid and it is currently unavailable.
When it comes back, it’ll be probably another year of non-existent inventory and dealer bullshit to wade through to try and get one.
No new vehicles for me. Hope to have my truck paid off 2 years from now and hold on to it until it falls apart.
Being the last year of a VW Golf GTI / Golf R with a 6MT did give me great pause to consider it.