A growing share of buyers who sat out the last few years are returning to both the new and used car markets. The reason behind this dramatic comeback? An enticing combination of increased new vehicle supply and cooling prices has drawn stubborn consumers back into showrooms after years of hibernation.
The backstory
Pricing in the new car market plateaued in Q4 2023 at $48,056 and dropped to $46,992 for Q1 2024, marking the first time that average transaction prices (ATPs) fell below $47,000 since Q2 2022. Despite the drop in prices, new vehicles are sitting on dealer lots for longer: According to Edmunds data, days-to-turn — the number of days a vehicle sits on a dealership lot before being sold — climbed to 52 days in Q1, marking the sixth quarter-over-quarter increase in a row. These increased lot times, paired with ATP reductions, are also placing downward pressure on used values.
The used market posted a $27,113 average transaction price in Q1, which is down 4.5% from last year’s $28,381, but still up 33.9% from 2019’s $20,247. The steady trend toward reduced used vehicle values paired with historically low days-to-turn indicates that price reductions are resonating with consumers. The average days to turn for used vehicles dropped to 37 days in Q1 2024 (the same as in Q1 2023), whereas days to turn for new vehicles increased from 35 days in Q1 2023 to 52 days in Q1 2024.
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