Analysts Highlight Several Factors Contributing to a Better Year for Consumers

　　Predicting economic trends is a complex task,especially with the diverse and expansive U.S.economy.Various indicators and their interpretations often lead to differing forecasts.For the past two years,we’ve heard promises that the car buying situation would improve.While there have been some positive changes,the average transaction price of a new car remains above$48,000,a figure unchanged for 18 months,according to Kelley Blue Book.Increased inventory and incentives are available,yet many popular models now cost$5,000 to$10,000 more than in 2022.Supply chain issues persist,and higher interest rates add to the challenges.Even everyday items like a bag of Cheetos have seen price hikes.

　　It’s plausible that analysts have meant,”Things are not deteriorating as rapidly as before,”which can be seen as progress.However,a new market assessment from automotive M&A advisory firm Dave Cantin Group(DCG),the”U.S.Retail Automotive 2024 Market Outlook Report”(MOR),suggests that genuine improvement is on the horizon.CEO Dave Cantin shared with Autoblog that 2024 is expected to be favorable for consumers due to several factors:a stronger-than-expected economy and job market,declining interest rates,continued inflation reduction,and increased dealer inventory levels.

　　The report suggests that the last 12 to 18 months have set the stage for”a gradual shift towards more favorable conditions for consumers,driven by significant changes that will continue into 2024.”

　　Aimed at dealers and sales outlets,the report provides insights on what to anticipate in 2024 and how to navigate the market.It starts with an honest assessment:”Many executives(OEM,supplier,or dealership)have described the post-COVID results as’better than we deserved.’Over the past three years,it seems everyone has benefited except the consumer,who has faced higher prices,fewer choices,longer lead times,and increased competition to purchase vehicles.”

　　Summarizing the conclusions,the report states,”The industry is entering 2024 with expectations of a’new normal’that won’t be as attractive as 2023 but better than pre-pandemic 2019.A leading private dealership CEO put it succinctly:’At the start of 2023,we aimed for 80%of our 2022 results.We’re aiming for the same in 2024,and this time we believe it.'”

　　The outlook indicates a balance between past difficulties and future improvements.

　　On the consumer front,there are some promising developments.The FTC’s Combatting Auto Retail Scams(CARS)Rule,although delayed and contested by dealer associations,aims to eliminate junk fees and deceptive sales tactics.Even if implemented,its impact will vary by state and primarily rely on consumer complaints to enforce financial transparency and recordkeeping standards.This means consumers might still face issues before seeking redress,but it could deter the worst practices.

　　Despite the rise of online shopping,80%of respondents still prefer buying vehicles from traditional dealerships.The MOR report suggests proactive dealers will emphasize value through transparent pricing and competitive offerings,including perks like warranty levels and service convenience.An example is Toyota’s Silver Certification for lower-priced,high-mileage used cars with added warranty security.

　　The DCG forecasts that anticipated interest rate drops in mid-to-late 2024 will release pent-up demand,boosting vehicle sales,particularly for those relying on traditional or alternative financing.This could appeal to the 27%of buyers delayed by high APRs.

　　SUVs and trucks are set to become even more popular.According to the Alliance for Automotive Innovation,in 2022,the vehicle distribution was roughly 35%sedans and 36%SUVs.DCG found that 53%of consumers are likely to choose an SUV or truck for their next vehicle,up from 46%currently driving them,due to perceived reliability,versatility,and safety.

　　Moreover,consumer demand is shifting towards electrified vehicles,particularly hybrids,as interest in EVs wanes.This is influencing automakers to adjust their strategies in real-time.

　　The detailed report is a valuable read for anyone deeply researching their next vehicle purchase.As with negotiating a car deal,sometimes success lies in understanding the psychology of the dealer.

　　Ultimately,we’ll know in 11 months if DCG’s optimistic predictions for 2024 hold true.