Americans are buying 16 million cars while prices soar

In 2024, American auto buyers are showing increased enthusiasm for purchasing new vehicles, as they are projected to buy 16 million cars by year-end. A recent report from Cox Automotive indicates that this rising consumer interest is partly influenced by the conclusion of the presidential election and the availability of substantial year-end deals. With new-car inventory at its highest level in four years, buyers now have more choices and are benefiting from increased discount incentives, which have risen 60% compared to earlier in 2023. However, average new vehicle prices remain high, averaging $48,623, and monthly payments for new car buyers are exceeding $730 on average. Around 80% of buyers are financing their purchases with interest rates ranging between 5.24% and 15.77% based on credit score. Industry analysts, however, express concern about the sustainable nature of the current market. David Zoia, a long-time analyst, suggests that while the numbers appear strong, consumers are generally spending less on vehicles than in previous years. He believes that the market is not as robust as some reports indicate, hinting at a possible softening of consumer spending in this sector. Furthermore, the rising inventory levels of new vehicles have raised concerns among automakers about pricing pressures and dealership turn rates, which refers to how frequently inventory is sold and replaced. The elevated inventory levels, reaching 3.23 million units, may exert additional pressure on manufacturers if inventory levels continue to escalate. Experts contend that the current environment, while advantageous to consumers, could pose challenges for the auto industry moving forward. Overall, November and December are expected to be strong sales months, with industry experts predicting a sustained momentum for car sales into the end of 2024.