New car prices have been at record highs in recent years due to pandemic-related delays and vehicle shortages, making car shopping a frustrating experience for many. However, according to J.D. Power’s recent sales forecast, the average new-vehicle retail transaction price has actually fallen compared to a year ago. This decrease in price is expected to result in a significant increase in new car sales for the month of June, with buyers projected to spend almost $44.6 billion on cars, making it the fourth-highest on record.
### Price Drops and Rising Inventory Levels
In June 2023, the average new car buyer paid $46,229, but that price declined to $44,857 in June 2024, a 3% drop. This decrease is attributed to rising inventory levels, with more cars reaching dealers’ lots. As a result, manufacturers are offering more generous incentives, such as promotional financing interest rates and cash back. In fact, incentive spending per vehicle has increased by more than 50% from a year ago. Lease deals are a significant contributor to incentive spending, accounting for almost 23% of new retail sales.
### Ease of Finding Vehicles and Longer Dealer Lot Stays
With more inventory available, buyers now have an easier time finding the vehicle they want without having to wait or conduct long-distance searches. Fewer vehicles are being pre-sold, and new cars are expected to sit on dealer lots for an average of 45 days, a 17-day increase from June 2023.
### Cyberattack on Dealer Management System
While the increase in inventory and decrease in prices are positive developments for dealers, buyers, and automakers, the situation has not been entirely stress-free. A recent cyberattack on CDK Global’s Dealer Management System has affected thousands of dealers nationwide, slowing the sales process and complicating communications between dealers and buyers. This outage is expected to extend through the July 4 holiday weekend, a major promotional time for the auto industry.
### Outlook for the Future
Overall, the recent price drops and increase in inventory levels are positive signs for the auto industry. As manufacturers continue to offer incentives and buyers have an easier time finding the vehicles they want, new car sales are expected to increase in the coming months. However, the impact of the cyberattack on dealers’ operations remains to be seen, and it may continue to pose challenges in the short term.
In conclusion, the recent decrease in new car prices and the rise in inventory levels are positive developments for the auto industry. While challenges such as the recent cyberattack on the Dealer Management System may pose temporary obstacles, the overall outlook for the future of new car sales is promising. Buyers can expect to have an easier time finding the vehicle they want and taking advantage of incentives, while dealers and automakers can look forward to increased sales volumes.