CarGurus has released its annual market analysis, '2024 Recap & 2025 Outlook', which outlines prevailing trends and expectations for the automotive industry in the upcoming year. The report, presented in Boston, underscores significant influences that have shaped the current market landscape, particularly focusing on the theme of affordability as a key driver for consumer behaviour in 2024.
Kevin Roberts, the Director of Economic and Market Intelligence at CarGurus, noted, “If 2024 had one defining theme, it would be affordability. As consumers became more price conscious in response to high interest rates and stubbornly high prices, demand for used vehicles—especially Certified Pre-Owned Vehicles—grew significantly.” The emphasis on affordability is expected to continue into 2025, particularly as the effects of proposed tariffs and possible changes to electric vehicle (EV) tax credits loom on the horizon.
The report highlights a remarkable increase in new vehicle inventory, with a reported rise of nearly 31% since the end of 2023. The average price of new vehicles stands at approximately $49,000, while some automakers are observing longer market days supply (MDS) compared to the national average of 82 days. Notably, manufacturers such as Stellantis and Ford have MDS figures hitting 121 days, indicating potential inventory pressures.
In contrast, the used vehicle market remains notably tight with an average price reduction of 3%, settling at $27,900. The availability of Certified Pre-Owned (CPO) vehicles has increased by nearly 10%, while demand for these models surged by 17%, pointing to a consumer shift towards well-maintained, previously owned cars.
Looking ahead, the report outlines several trends anticipated for 2025:
The growing popularity of hybrids: As affordability becomes increasingly crucial, prices for hybrid vehicles have seen a decline of nearly 10%. In 2024, the average price for a new hybrid was reported at around $46,600, significantly lower than the average EV price of $62,000. Consequently, hybrid models such as the Toyota Sienna and Honda Civic Hybrid have emerged as some of the year’s fastest-moving vehicles.
Shortages in late model year used vehicles: The continuing effects of the semiconductor shortage are evident, with 2020 and 2021 model years being notably scarce. The overall used car inventory stabilised with only a 1% decline; however, the number of 2021 models available decreased by nearly 22%, affecting market availability and landscape for years to follow.
A sustained preference for larger body styles: Market analysis indicated that larger vehicles, particularly pickups, retain their popularity. Models such as the Chevrolet Silverado 1500 and the Ford F-150 featured prominently among the most viewed vehicles for 2024, reflecting consumer preferences.
Forecasts for 2025 also include:
The impact of potential tariffs: As tariff uncertainties persist, certain automakers, particularly those with a higher proportion of vehicles manufactured outside North America like Hyundai and Kia, may face distinctive challenges. The timing and implementation of these tariffs will be critical in determining overall market adjustments.
The potential limitation of demand due to EV tax credits: The looming possibility of ending the New Clean Vehicle Tax Credit, which offers up to $7,500 for qualifying EVs, could affect sales volumes, particularly in the used vehicle segment where affordability is a key concern.
An anticipated rise in demand for premium options: While affordability is anticipated to remain a priority, a potential decrease in interest rates may enhance purchasing power, possibly leading to a renewed interest in higher-priced vehicles, contingent on tariff-related influences.
For an in-depth exploration of these trends, the complete CarGurus '2024 Recap & 2025 Outlook' can be accessed via their official communication channels.
Source: Noah Wire Services