Stabilizing Prices and Growing Inventory Create Bright Spots for Cost-Conscious Shoppers

Rhea-AI Summary

CarGurus, a leading digital auto platform, released its 2024 Mid-Year Review highlighting affordability opportunities in the automotive market.

Used car prices have dropped to an average of $28,496, down 8% year-over-year, while new car prices average $50,214, down 3.3%. Inventory levels have surged, with new car availability up 68% and used inventory up 5% year-over-year.

Notably, there is a rising demand for more affordable vehicles. Searches for used cars under $10,000 increased by 26%, and searches for new cars under $30,000 rose by 36%. Sedans, 2023 models, and electric vehicles present significant savings opportunities. States like New York, Florida, and Maryland offer the most affordable used car options.

Positive

• Used car prices fell by 8% year-over-year to $28,496.
• New car prices decreased by 3.3% to $50,214.
• New car inventory increased by 68% year-over-year.
• Used car inventory rose by 5% year-over-year.
• Searches for used cars under $10,000 rose by 26%.
• Searches for new cars under $30,000 increased by 36%.
• 2023 models are available at discounted prices due to oversupply.
• Average prices for new electric vehicles dropped by 9%.

Negative

• High interest rates and rising insurance costs are impacting overall car affordability.

Insights

Financial Analyst

CarGurus' mid-year analysis highlights some promising developments for both the company and potential car buyers. The moderation in both new and used car prices is a key takeaway. With the average price of a used car dropping to $28,496 and the new car price decreasing to $50,214, this could signal a healthier balance between supply and demand. However, the high interest rates and rising insurance costs continue to be a drag on overall affordability, which is something to watch closely.

For investors, the year-over-year 68% increase in new inventory and a 5% rise in used inventory are positive signs. These figures suggest that supply chain constraints are easing, a important factor that has plagued the auto industry. Increased inventory levels could lead to stronger sales figures, particularly if pricing continues to cool off, making cars more accessible to a broader range of consumers. Short-term, this could boost revenue as pent-up demand gets satisfied. Long-term, if CarGurus can maintain a steady inventory while balancing prices, it could solidify its market position.

Market Research Analyst

The analysis reveals a noteworthy shift in consumer preferences. The increased search activity for used cars under $10,000 and new cars under $30,000 indicates a growing focus on affordability. This trend could benefit manufacturers and dealerships that can offer quality vehicles at lower price points. However, it also intensifies competition in these segments, which account for a smaller share of listings (13% for new cars under $30,000). This discrepancy suggests a potential market gap that savvy players could exploit.

The data also highlights the uptick in demand for compact sedans like the Toyota Corolla, Honda Civic and Nissan Sentra. These models are attracting more buyers, with sales demand up 17% year-over-year. For investors, this could indicate a shift away from more expensive vehicle types, potentially impacting the profit margins of companies focused heavily on larger, pricier models.

Electric Vehicle Analyst

The report underscores an oversupply of new electric vehicles (EVs), which is driving prices down. The 117 market days supply (MDS) for new EVs, compared to 78 for internal combustion engine vehicles and 54 for hybrids, suggests a slower turnover for EVs. This oversupply is bringing the average new EV price to $63,102, a 9% decline from its peak. For used EVs, prices have fallen by 24% to $37,171. While this might seem negative, it actually presents a significant opportunity for cost-conscious shoppers to enter the EV market, potentially accelerating the adoption of electric vehicles.

For investors, the price moderation in the EV segment could attract a new wave of buyers, particularly those hesitant to switch due to higher costs. However, it's essential to monitor how this impacts the resale value and perceived longevity of EVs. Long-term, if EV adoption increases, companies invested in EV technology and infrastructure could see substantial growth, even though short-term margins may be squeezed.

CarGurus mid-year analysis finds sedans, electric vehicles, and 2023 models offer biggest opportunities on the road toward affordability

CAMBRIDGE, Mass., June 20, 2024 (GLOBE NEWSWIRE) -- CarGurus (Nasdaq: CARG), the No. 1 visited digital auto platform for shopping, buying, and selling new and used vehicles¹, today released its 2024 Mid-Year Review, identifying areas of opportunity as affordability comes into greater focus for today’s shopper.

“In many ways, the market at mid-year is in a robust position with pent-up demand fueling sales, and improved pricing and selection giving shoppers more options. But this momentum is dependent on affordability as consumers face factors that are raising the all-in cost of car ownership today,” said Kevin Roberts, Director of Industry Insights & Analytics at CarGurus. “While interest rate cuts aren’t on the table in the near-term to help ease pressures, we are seeing rising opportunities for shoppers to find high-quality options at a great price.”

CarGurus data shows prices are moderating, with the average price of a used car now at $28,496, down 8% year-over-year, while the new car price is $50,214, down 3.3%. Rebounding inventory is helping to cool prices, where new inventory has increased 68% year-over-year and used has gone up 5% over the same time period.

While this has helped prop up overall sales demand for new and used vehicles, consumer search activity shows growing desire for more affordable price points in light of decades-high interest rates and rising insurance costs. At mid-year, used car searches on CarGurus for listings under $10,000 were up 26% year-over-year. New car searches under $30,000 were up 36% over the same period, raising the competition for a price segment that accounts for just 13% of listings.

To help shoppers navigate the market, the experts at CarGurus have identified the top areas of opportunity for savings:

• Sedans hit the sweet spot: The hunt for affordability is translating to an uptick in demand for new compact sedans, which have an average listing price of $29,600. Year to date, sales demand for the body style is up 17% year-over-year, with the Toyota Corolla, Honda Civic, and Nissan Sentra leading in sales by as much as 54% year-over-year.
• 2023 models could be priced to move: With new car inventory at four-year highs and 2025 models coming onto dealer lots, remaining 2023 models offer a chance for shoppers to buy new at a bargain. CarGurus data shows nearly 6% of new car listings in the U.S. are 2023 models. Models with the highest supply include the Ram 1500, with 141 market days supply (MDS), Chevrolet Silverado 1500 with 130 MDS, and Jeep Gladiator at 116 MDS. Shoppers considering a Ram 1500, for example, have the potential to save 12% with a 2023 model (average listing price of nearly $50,000) over a 2025 model year (average listing price of over $57,000).
• Oversupply of new electric vehicles (EVs) helping moderate prices: At mid-year, the MDS for new EVs was 117, compared to 78 for internal combustion engine vehicles and 54 for hybrids. Price adjustments on existing models and the introduction of more affordable options have helped the average new EV price decline by 9% from the high point in January 2023, down to $63,102. New EV prices are also influencing the used market, with average prices down 24% over the same period to $37,171.
• New York, Florida, and Maryland offer the most affordable used inventory: When examining the states with the highest concentration of high-quality, affordable used car listings, New York, Florida, and Maryland top the list. Nationwide, the share of listings for 2017 model year or newer vehicles that are priced $25,000 or under with less than 75,000 miles is approximately 21%. In New York, that share jumps to 27%. Conversely, South Dakota offers the least amount of options, with about 10% of market share.

To read about these trends and more, the complete 2024 Mid-Year Review is available here.

About CarGurus, Inc.
CarGurus (Nasdaq: CARG) is a multinational, online automotive platform for buying and selling vehicles that is building upon its industry-leading listings marketplace with both digital retail solutions and the CarOffer online wholesale platform. The CarGurus platform gives consumers the confidence to purchase and/or sell a vehicle either online or in-person, and it gives dealerships the power to accurately price, effectively market, instantly acquire, and quickly sell vehicles, all with a nationwide reach. The company uses proprietary technology, search algorithms, and data analytics to bring trust, transparency, and competitive pricing to the automotive shopping experience. CarGurus is the most visited automotive shopping site in the U.S. ¹

CarGurus also operates online marketplaces under the CarGurus brand in Canada and the U.K. In the U.S. and the U.K., CarGurus also operates the Autolist and PistonHeads online marketplaces, respectively, as independent brands.

To learn more about CarGurus, visit www.cargurus.com, and for more information about CarOffer, visit www.caroffer.com.

CarGurus^® is a registered trademark of CarGurus, Inc., and CarOffer® is a registered trademark of CarOffer, LLC. All other product names, trademarks and registered trademarks are the property of their respective owners.

¹ Similarweb: Traffic Insights, Q1 2024, U.S.

Media Contact:
Maggie Meluzio
Director, Public Relations & External Communications
pr@cargurus.com

Investor Contact:
Kirndeep Singh
Vice President, Head of Investor Relations
investors@cargurus.com

FAQ

What are the current average prices for used and new cars according to CarGurus' 2024 Mid-Year Review?

The average price of a used car is $28,496, down 8% year-over-year, and the average price of a new car is $50,214, down 3.3%.

How has car inventory changed according to CarGurus in 2024?

New car inventory increased by 68% year-over-year, and used car inventory increased by 5%.

Why are 2023 car models considered a good buy according to CarGurus?

Due to the oversupply and the arrival of 2025 models, 2023 cars are priced lower, offering significant savings opportunities.

Which states offer the most affordable used car options based on the CarGurus 2024 Mid-Year Review?

New York, Florida, and Maryland have the highest concentration of affordable, high-quality used car listings.

How have electric vehicle prices changed in 2024 per CarGurus?

The average price for new electric vehicles dropped by 9%, and the used electric vehicle prices fell by 24%.