Edmunds

New and used car prices may have leveled off from record-breaking highs thanks to improved inventory and an uptick in incentives over the last year, but affordability concerns are nonetheless weighing heavy on the minds of American car shoppers. This week Edmunds rolled out its latest ‘Car Shopper Expectations vs. Market Realities’ report, digging into why returning car shoppers are likely experiencing whiplash as they come back to the market with skewed perceptions of affordability based on their last vehicle purchase (based on the average trade-in age of six years for new vehicles, we can surmise that many of those consumers last purchased a car in 2018). A few notable data points: ?? 73% of consumers report they’ve already held off purchasing their next vehicle because of elevated prices; more than 62% due to high interest rates. ??48% of new car shoppers said they’d like to spend $35,000 or less on their next vehicle, and 14% said they’d like to spend $20,000 or less. However, Edmunds data reveals the average transaction price for a new vehicle was $47,716 in July 2024, and there were nearly zero new vehicle transactions under the $20,000 mark. ??3 out of 4 used car shoppers are targeting an interest rate between 0 - 5%, but 6 out of 10 car buyers who financed a used vehicle purchase in July agreed to an interest rate between 6 and 11%. ?More than half of car shoppers noted they were planning on putting off other expenditures in order to afford a vehicle, with 29% saying they were deferring a vacation, 15% basic monthly needs, and 5% medical procedures. ??54% of consumers said they plan on working more hours or taking on a new job to afford their next vehicle purchase. TL;DR: Even as the new and used vehicle markets continue to normalize, car shoppers are still facing historically harsh purchasing conditions and those returning to showrooms for the first time in years are likely going to experience major sticker shock. In response, consumers are likely being forced into making some tough decisions, which in turn will probably change up some of their typical shopping habits. Moving forward, it’s going to be critical for automakers and dealers to know the perception gap exists in order to offer a level of compassion for customers. After all, these are people making real sacrifices in order to afford a vehicle, which is making the car shopping process more stressful than ever. #EdmundsInsights Check out the full report here: https://edmu.in/3zg8m14?

Q2 used car data is in the books, with somewhat predictable results, but also heavy implications for the market going forward, or at least some subsets of the market. New data from Edmunds reveals that the overall used vehicle market has been performing in a more predictable fashion lately thanks to shifts in new-car market trends. As inventory has steadily recovered in the new-vehicle sector over the past year, discounts and incentives on aging new car inventory are now beginning to be reflected in the used market. With new-car prices trending downward, values of newer used vehicles have correspondingly declined: Used vehicle values fell by 6.8% year-over-year from $29,742 in Q2 2023 to $27,472 in Q2 2024. But even as the overall market normalizes, there’s one subset of the market that is wreaking havoc on owners seeking to trade in their vehicles as well as dealers aiming to forecast an accurate selling price. Spoiler alert: we’re talking about secondhand EVs.? Here’s a quick rundown of what’s going on ?? ?? Automakers have been utilizing virtually every incentive under the sun to move stale new-EV inventory.? Whether via cash incentives, MSRP reductions or heavily subsidized leases that also allow the use of the Inflation Reduction Act tax credit, the trickle-down effect on the used vehicle market has been pronounced. ?? Used EV values have undergone a major course correction, falling 20.5% year over year from Q2 of 2023 and 38.5% from Q2 2022. ?? This downward trend in EV values marks an abrupt turn in the trajectory of the used EV market, which had a runup in prices with the introduction of competitive products. We seem to have reached a point where used EVs values are succumbing to more mainstream market forces. ? This trend has some heavy implications for EV owners: In a recent Edmunds analysis of negative equity trends in the automotive industry, the data showed that EV owners with negative equity owe more money on their loans than owners of internal combustion engine (ICE) vehicles. The not-so-great news: Even though automakers are reducing production and coming to terms with EVs commanding less of a price premium than previously thought, the debut of new, lower-priced EVs over the next few years will unfortunately only exacerbate the EV value? conundrum since these cheaper market entrants will compete with similarly priced used EVs. The good news: Consumers who are prepared for all the lifestyle considerations that come with an EV could get a killer bargain on used electric transportation. For more details, check out the Q2 2024 Used Vehicle Report here: https://edmu.in/46NNta7 #EdmundsInsights

Tesla quarterly earnings reports have historically been the subject of heavy scrutiny as a barometer of the health of the overall EV market. Today’s call comes at a particularly interesting moment in time when widespread EV adoption is threatened by a number of headwinds and EVs are supercharging political debates among Americans in an historic and unprecedented presidential race. According to Edmunds survey data from earlier this year: ??Democrats have an overwhelmingly more favorable opinion of EVs, with only 5% claiming to dislike EVs, compared to 39% of ??Republicans. As America’s partisan divides widen, Elon Musk's very public support of former President Donald Trump has the potential to alienate Democratic-leaning consumers who are more likely to be EV potential buyers/owners, and could therefore pose a threat to Tesla’s bottom line. The road ahead for Tesla is already laden with obstacles amid increasing global competition and an aging product lineup — and price cuts simply aren’t as effective as they once were in driving sales for the company. Giving prospective EV buyers any sort of political reason to avoid purchasing a Tesla is probably not what the company needs right now — especially since Edmunds data reveals that a growing share of Tesla owners are more likely to trade their Tesla in for an EV over an ICE vehicle when buying their next vehicle. TL;DR: Tesla does theoretically have the advantage of keeping such a large consumer base in the fold (as all brands do), but Musk's outspoken political leanings could give other automakers an opening to crack into Tesla's early and expansive EV buyer base.?

Consumers who purchased a car during the height of the pandemic and are feeling some buyer’s remorse might want to think twice before trading in for a new ride. And those who bought an EV might want to think a third time.? Over the last few years, inflated vehicle trade-in values kept shoppers somewhat shielded from falling underwater on their car loans, but as the market continues to correct itself, this protection is falling away. According to Edmunds data: ??Nearly 1 in 4 Americans (23.9%) who financed a new vehicle purchase with a trade-in during Q2 2024 were upside down on their car loan—marking the highest level Edmunds has recorded since Q1 2021 (31.9%). ??Vehicle owners who are underwater on their car loans owe more than ever before— a record $6,255 in Q2 2024. ??The average age for vehicle trade-ins with negative equity is on the climb: In Q2 2024 that figure increased to 3.7 years old compared to 3.4 years old in Q2 2023 and 3.2 years old in Q2 2022. But here’s the real kicker: ??Edmunds Q2 2024 data also shows that EV owners underwater on their car loans owe significantly more on average ($10,326) compared to owners of ICE vehicles ($6,018). A contributing factor to this higher dollar amount is the fact that the average trade-in age for EVs (2.1 years) is significantly lower than ICE vehicles (3.7 years). It’s not surprising that EV owners are feeling the brunt of accelerated levels of depreciation — this is a fairly standard occurrence for vehicles laden with emerging technology. And incentives on new EVs are only adding to the problem by further depressing used EV values. But this is not great news for the fledgling EV market, which is already struggling to gain consumer buy-in. Consumers are still trying to work out if EVs can actually fit into their lifestyle given charging and infrastructure issues, and adding financial risk to the equation will likely give pause to even the most enthusiastic EV intenders. TL;DR: I wouldn’t go so far as to say this is detrimental for the new EV market, but we’re probably going to see some interesting shifts in EV purchase decisions moving forward. That might look like even more consumers opting to lease EVs or purchasing used to avoid getting trapped in the accelerated EV depreciation curve. More information can be found here: https://edmu.in/4eUpXMb

Rounding out Pride Month, we’re excited to share that Edmunds has been recognized on the Top Most Loved Workplace List for LGBTQ+ Inclusion by Most Loved Workplaces?! Throughout Pride Month, we’ve been especially active to support our employees and our community through initiatives, including:? * an LGBTQ+ family building virtual AMA with Dr. Juan Alvarez from Kindbody * an LGBTQ+ financial planning Q&A in collaboration with Charles Schwab * participation in the West Hollywood Pride Parade, led by the Edmunds PRIDE ERG * and a company lunch at our Edmunds headquarters catered by Socalo, a local LGBTQ+-owned restaurant We’ve also held several lunch & learns with the Los Angeles LGBT Center on various topics throughout the year, from supporting trans youth to supportive allyship. Edmunds’ culture is rooted in the belief that we can only thrive if we are able to trust and empower one another, including the comfort in bringing our whole, true selves to our workplace. We look forward to building on this value in the years ahead. https://lnkd.in/dbcwmKPc

Car shopping is evolving faster than ever: According to a new consumer survey by Edmunds, here are the platforms with the biggest impact on car purchase decisions: 1. Car shopping websites? ? ? ? ? ? ? ? ? ? ? 29% 2. YouTube? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? 18% 3. Auto enthusiast publications? ? ? ? ? ? ? 17% 4. Social media and dealer websites ? ? 14% (tied) 5. Manufacturer websites ? ? ? ? ? ? ? ? ? ? ? 10% Shopping hubs (like Edmunds) play a major role — delivering vehicle listings, reviews and tools. But social/content platforms like YouTube, IG and TikTok are gaining steam (32% combined!). Smart dealers are using *both* to target shoppers at different points of their car buying journey. Learn more about Edmunds here: https://edmu.in/3wW3cGw (Data via CDG partner: Edmunds #edmundspartner)

Consumers are complex — and so is the #EV market. Listen in as Jessica Caldwell, AVP and Head of Insights, Edmunds, breaks down consumer perceptions and behavior, as well as the effect of interest rates, affordability, and inventory. It’s an interesting conversation on what consumers really want — and what it will take to turn the tide on EV adoption. https://sae.to/4bVn633 #SAETomorrowToday

Why The Car Biz is Starting to Look a Lot Like 2008: ? 0% for 60 months becoming a unicorn ? Payment shock hits car buyers ? Selling cars on TikTok Live and much more! Watch the 3rd episode of The Car Dealership Guy Market Update—Brought to you by Edmunds: Stream it now: Spotify:?https://lnkd.in/g6xc2cib YouTube:?https://lnkd.in/gkYrdgB4 Apple Podcasts:?https://lnkd.in/gsDTFHM4

Shoppers looking for deals on new vehicles haven’t had much luck in the past few years due to supply chain disruptions limiting new car inventory. But as the market continues to normalize post pandemic, we’re seeing some encouraging trends make a comeback — in this case I’m referring to summer discounts on New Old Stock (NOS). According to Edmunds data from May, the share of new car inventory that is 2023MY vehicles on dealer lots nationwide climbed to 6.8%. That might not seem like much at first glance, but it does represent an increase from May 2022, when 2021MY vehicles held a 3.7% share, and is on par with what we saw pre-pandemic in May of 2019, where the share of 2018MY vehicles was 6.7%. How does this translate into savings? Edmunds data shows that 2023MY vehicles are being listed by dealers $4,147 below MSRP on average. And when financed by qualified shoppers, 2023MY vehicles are obtaining lower interest rates — more than 1 in 4 purchases of 2023MY vehicles financed at dealerships had an average APR of 1.99% or less, compared to just 4.1% of financed 2024MY vehicle purchases. But the real deals for shoppers can be found at the brand level—we took a deeper look at the share of 2023MY vehicle listings on Edmunds in May by brand and found that domestics with the greatest buildup of outgoing model year vehicles are listing some of the greatest average discounts: Dodge, Chrysler and Buick topped the list of makes with the highest concentration of 2023MY vehicle listings nationwide at 52.6%, 38.4% and 17.6%, respectively.? These brands listed an average discount of $6,753, $6,252 and $4,256, respectively, for their 2023MY vehicles. Of course, consumers can’t expect these deals to be everywhere and research remains a critical piece in finding some of the best discounts. On top of that, purchasing an outgoing model year vehicle might not be the best investment for less committed car owners due to the major depreciation curve that hits these vehicles when driven off the lot compared to current model year vehicles. TL;DR there are likely more decent deals to be discovered this holiday weekend and summer than there have been in years past thanks to a surplus of outgoing model year vehicles. But YMMV, so research is key. ?? https://lnkd.in/g9KADNj2 ]

Car shoppers who sat out the last few years made a dramatic return to both the new and used markets in Q1 2024 thanks to an enticing combination of increased new vehicle supply and cooling prices. How do we know this? The average trade-in ages for new and used vehicle purchases are on the rise. According to Edmunds data, in Q1 2024, the average trade-in age for new vehicles climbed to 6.1 years and 9.4 years for used vehicles, compared to 5.3 years for new and 7.9 years for used in Q1 2022. This trend has major implications for the overall industry, but most notably:? ??The used market is getting a boost from older, more affordable vehicles? ??? Used vehicles are flying off dealer lots at record rates?? ?Transactions with trade-ins are bringing more money to the table for dealers and automakers More Q1 2024 used vehicle market analysis can be found on Edmunds here: https://lnkd.in/gCMqRQVq