With the 2024 auto market now well underway, dealers are anxious to know how their businesses will perform this year compared to last. Taking a look back at the major events of 2023 and how they changed the automotive landscape will be a crucial step to forming the appropriate strategies for the months ahead.
On this episode of Inside Automotive, host Jim Fitzpatrick is joined by Charlie Chesbrough, senior economist at Cox Automotive. Chesbrough has been one of the nation’s leading auto market experts for years, supplying dealers with vital insights into consumer trends and industry shifts so that they can plan for success. Now, he takes a look back at the last 12 months of business to explain how their events will impact the retail automotive sector throughout 2024.
1. The 2023 auto market performed surprisingly well. Many dealers entered the year with lower expectations due to concerns over a looming economic recession, high inflation, and interest rate hikes. Despite these fears, demand remained high throughout most of the year, driving sales and revenue, even as falling prices began to eat at dealership profit margins.
2. In 2024, Chesbrough expects sales will continue to improve as the auto market becomes more buyer-friendly. Although early 2023 saw prices skyrocket due to inventory constraints, new vehicle supply has since made a substantial recovery and continues to improve on a daily basis, forcing values down to sustain demand. Incentives and discounts are also returning as competition for buyers heats up.
3. Most of 2023’s sales gains came from the fleet sector, where purchases increased by 35%. In comparison, retail sales and leases rose only 9%. Chesbrough attributes the fleet segment’s impressive performance to backed-up demand from business clients. Explaining that this demand has largely been satisfied, he expects fleet sales to level out in the 2024 auto market.
5. Although anxieties tend to run high during election years, Chesbrough notes that the 2024 presidential race is unlikely to make a big impact on the auto market. He also expects to see leasing return over the course of the year, especially in the electric vehicle segment.
"We still see strong fleet [sales], but there's not going to be quite as much pent-up demand because the fleet sector had been kinda starved a bit in the lean inventory environments, when the manufacturers wanted to keep products with the dealer. Since they're kinda filling up some of that pent-up demand on the fleet side, that's probably not going to be very strong here in 2024, so the manufacturers are going to rely even more on the retail sector." — Charlie Chesbrough