On this episode of CBT Now, host Jim Fitzpatrick is joined by Tyson Jominy, vice president of data and analytics at J.D. Power, to discuss the latest trends affecting the 2024 car market. Jominy has played an essential role in preparing dealers for headwinds with accurate forecasts and meticulously crafted data insights.
Key Takeaways
1. Industry-wide sales were strong for 2023, hitting roughly 15.5 million by the end of the year. However, Jominy notes that while the retail sector did see phenomenal growth, the fleet business grew 50%, making it one of the biggest contributors to the year’s success.
2. Although automakers leveraged opportunities in the fleet business to boost profits for 2023, Jominy expects demand among fleet clients to cool in the coming months. As a result, manufacturers are likely to focus more heavily on retail this year.
3. While electric vehicles were top-of-mind for many dealers in January 2023, the conversation had gradually shifted to focus almost entirely on hybrids by December. Jominy reports that EV and hybrid sales were “neck and neck” for the entire year, entering 2024 with near-identical market shares.
4. The average MSRP exiting 2023 was above $50,000, a record-breaking high. But equally rare was the decline of transaction prices throughout 2023, which ended December below the average recorded in January, a feat Jominy has never seen in his career.
5. Although it is possible that MSRPs will decline in 2024, Jominy notes that younger consumers and sub-prime buyers are, at the moment, essentially priced out of the market. In fact, only 6% to 7% of car purchases were made by sub-prime buyers in 2023, compared to the typical 10% to 12%. This means the industry is missing out on hundreds of thousands of sales due to the lack of affordability.
6. Incentives are likely to near pre-pandemic levels in 2024. Jominy notes that automakers are now offering more promotions than in late 2023 to attract buyers. Low annual percentage rates remain the most common incentive.
"With these high prices...it's a very expensive market, and so we are seeing a very mature wealthy consumer driving it forward. But who we're not seeing, and perhaps something we need to focus on in this industry, is that a lot of the youthful consumers and also sub-prime consumers: they're basically priced out of the market right now." — Tyson Jominy
