The midyear update of the 2024 Market Outlook Report from the Dave Cantin Group and Kaiser Associates emphasizes that electric vehicles (EVs) are becoming a permanent fixture in the automotive industry while local dealerships face uncertain futures. The report highlights key market trends and forecasts significant changes in the coming months.
For instance, the EV market is solidifying its place in the U.S. auto industry, following typical tech adoption trends. While initial expectations for EVs were overly optimistic, battery-electric and hybrid-electric vehicles are steadily growing. Companies like Tesla, Rivian, and VinFast lead the charge despite media hype and initial sales performance disappointments. EVs and hybrids are here to stay and will continue to expand their market presence.
However, U.S. auto dealers are experiencing solid year-to-date results, yet the “easy money” era is over. Dealers now face rising inventories, high interest rates, and new challenges such as cybersecurity. The automotive industry is returning to the pre-Covid grind, requiring hands-on management for sustained growth. Large retail automotive competitors are better positioned to drive margins and growth, leaving smaller, local dealerships struggling to keep up.
The report also indicates that 2024 is a tipping point for small dealer owners. Increased dealer consolidation and readily available data have shifted power to larger, more sophisticated dealer groups. Many small “mom-and-pop” dealers opt to sell rather than face the challenges of maintaining profitability amid high interest rates, elevated vehicle prices, and political uncertainties.
Moreover, the high average price of new vehicles, currently at $47,000, is unsustainable for many U.S. consumers. Persistently high interest rates are pushing consumers to their spending limits. The following U.S. administration, regardless of party, will face intense pressure to allow more affordable foreign vehicles, particularly EVs, into the market.
Overall, the midyear update also addresses issues related to the automotive supply chain, mounting inventories, the impact of U.S. Supreme Court decisions on regulation, and the ongoing squeeze on consumers and dealers from high interest rates. The report underscores the need for the industry to adapt to these evolving challenges to ensure long-term sustainability.
In summary, the Market Outlook Report midyear update provides a comprehensive overview of the automotive industry’s current state and future direction, highlighting the permanence of EVs and the challenges facing local dealers.
