U.S. new vehicle sales struggled in the third quarter of 2024, as economic and political uncertainty, high interest rates, and elevated vehicle prices deterred many buyers. Industry analysts from Cox Automotive and Edmunds project a 2% year-over-year drop in sales for Q3, with an estimated 3.9 million vehicles sold. This represents a 5% decline compared to the second quarter of this year, underscoring the challenging conditions facing the automotive market.
Despite a recent decision by the Federal Reserve to cut rates, it hasn’t been enough to significantly boost auto sales. Charlie Chesbrough, senior economist at Cox Automotive, emphasized that affordability remains a major issue. “2024 has been a volatile year for the new vehicle market, and more of the same is expected in Q4,” said Chesbrough. However, he noted some optimism for future sales as affordability slowly improves.
Industry forecasts for 2024 suggest total U.S. light-duty vehicle sales will reach approximately 15.7 million units, with Cox lowering its initial projection from 16 million. Edmunds has held steady on its original forecast. Jessica Caldwell, head of insights at Edmunds, pointed out that the high cost of vehicles is limiting consumer access to the market. “Who can afford new cars seems to be the big issue. On average, people have to finance $40,000 for a new car,” she explained.
The average transaction price for new vehicles, though down from last year, remains historically high at $47,870, according to Cox Automotive.
Among automakers, Honda and Ford are expected to post growth in Q3, while others such as Stellantis, Toyota, and BMW are predicted to face declines. Stellantis, in particular, could see a 21% drop in sales compared to last year’s quarter. CEO Carlos Tavares has prioritized pricing and profitability over market share, especially for key brands like Jeep and Ram.
Electric vehicles (EVs) are experiencing moderate growth, with sales projected to increase by 8% compared to last year. Many anticipated faster growth, but growth remains slower, and it is expected that Tesla, the long-time leader in the EV market, will see a 2.4% decline in Q3 sales, with its market share dipping below 50% for the second consecutive quarter.
Incentives have played a major role in boosting EV sales. The average transaction price for new EVs has remained steady year-over-year, but incentives now account for 13.3% of the price, the highest level seen in 2024. These incentives include the federal government’s up to $7,500 tax credit for purchasing or leasing EVs, though not all vehicles qualify unless leased.
As the market continues to grapple with affordability challenges, the automotive industry faces a crucial Q4 to determine whether consumer demand can rebound.
