New year brings tightening used-car supply, a
shifting definition of "American-made," and new strategies for
electric cars
CHICAGO, Dec. 17,
2024 /PRNewswire/ -- Cars.com Inc. (NYSE: CARS)
(d/b/a "Cars Commerce Inc."), an audience-driven technology company
powering automotive, today released its 2025 Automotive Trends.
The industry is entering the new year with a mix of optimism
and challenges as shifts in supply and demand continue to shape
automotive retail.
"Affordability is improving, but we're not out of the woods. Two
interest rate cuts in late 2024 eased borrowing pressures but the
average new car price remains stubbornly high," says David Greene, Cars.com analyst. "Further
complicating matters, many consumers are struggling financially.
Loan delinquencies are high, while used vehicle values have fallen
from record highs in the past two years, making it more difficult
for consumers to sell or trade out vehicles. While inflation is
cooling, sticker shock and affordability in the auto market remain
key challenges for 2025. The good news is that new car inventory
priced under $30,000 is increasing,
offering some relief for buyers and a bright spot for the year
ahead."
2025 Brings Challenges for Used Car Shoppers, Forcing a
Potential Shift Towards New Cars
The average new-vehicle
price has leveled off at $49,000,
slightly below its June 2023 peak of
$50,300, a small but encouraging
shift since prices began accelerating in spring 2021 from a
$37,000 average.1 A
positive shift for 2025 is that the inventory of new vehicles
priced under $30,000 increased by 42%
year over year in November, delivering some comfort for
budget-conscious buyers.1 Cars.com's new enhanced
experience aims to help new-car shoppers easily compare vehicles
and buying options to find the best vehicle for their budget.
"In 2025, more car shoppers may turn to new cars as the better
option. The late-model used inventory just isn't there, due to
fewer sales and leases in the past three years. As a result, the
options available will continue to command inflated prices," adds
Greene. "For new car shoppers, it will be beneficial as they may
get more for their trade-in, which also helps offset the price of a
new car."
'American-Made' Is Redefined
The definition of "American-made" is evolving, largely due to
the Inflation Reduction Act. Foreign automakers with U.S.-based
manufacturing facilities now rival legacy Detroit brands,
particularly in states like Alabama, Tennessee and Texas. The potential implementation of tariffs
in 2025 could further complicate how "American-made" is
defined and achieved in the auto industry. These tariffs are
expected to impact vehicle components, potentially raising the cost
of manufacturing new cars. Fully assembled imported vehicles,
already among the most expensive goods affected by such tariffs,
could face even higher costs. Notably, potential tariffs on
Mexico and Canada may conflict with the terms of the
United States-Mexico-Canada Agreement, thereby adding
uncertainty.
The impact of the American-made definition in the
electric-vehicle market is similar to the mainstream car market as
domestic EV battery production is reshaping the landscape and
boosting the presence of hybrids and EVs on Cars.com's
American-Made Index.
Tricky Balance Between EV Supply and Consumer Demand
Lingers
The EV market continues calibrating to consumer demand, driven
by growing inventories and declining used-EV prices. In 2024,
used-EV prices dropped more than twice as fast as the broader
used-car market, making them more accessible to a wider range of
consumers. On the new-car front, EV inventories increased by 35%
year over year, although price sensitivity remains a challenge —
new EVs are priced $13,000 above the
average new car.1 An overproduction of EVs has
left dealer lots with extra inventory to unload, causing automakers
like Ford and GM to slow production to find the right mix for
shoppers. Hybrids are growing in popularity for those interested in
the comfort of a gas-powered vehicle and the savings of an EV.
For more of the latest automotive news, reviews and car-buying
advice and tips, visit Cars.com/News.
1 Cars.com internal data
ABOUT CARS.COM®
Cars.com is the No. 1 most recognized automotive
marketplace visited by nearly 30 million in-market consumers each
month. Launched in 1998 and headquartered in Chicago, Cars.com empowers shoppers with the
data, resources and digital tools needed to make informed buying
decisions and seamlessly connect with automotive retailers.
Cars.com is the flagship offering from Cars.com Inc. d/b/a Cars
Commerce Inc., an audience-driven technology company empowering
automotive that simplifies everything about buying and selling
cars. Learn more at www.carscommerce.inc.
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SOURCE Cars.com Inc.