Buyers Take the Wheel for Car Sales in 2024

After three years of dramatic post-pandemic market swings, buyers in 2024 are poised to take back the wheel with plenty of inventory choices, slightly lower prices and a jump in automaker incentives. This buyer’s market has many hailing the return of normalcy.

Still, analysts predict slow growth for the industry in general, with many forecasting around 16 million new vehicle sales. That’s over a million fewer sales prior to the pandemic.

Although supply and demand are back in sync, several factors may have some buyers staying on the sidelines. Interest rates hovering around 7% combined with tighter auto lending mean new vehicles are out of reach for many. Slower overall economic growth also factors into fewer vehicle sales.

The good news is that used vehicle values continue to fall opening up possibilities for buyers pushed out of the new vehicle market. The Manheim Used Vehicle Value Index recorded a 7% year-over-year drop at the end of 2023. Compared to the peak of used values in December 2021, today’s used vehicle prices are down nearly 21%.

The Winding Road for Electric Vehicles (EVs)

Though there are reports of slowing EV sales nationwide, growth is still taking place and consumer options accelerate this year. Automakers plan to reveal 25 new models in 2024, with several brands launching their first EVs for U.S. consumers, including Acura, Jeep and Land Rover.

While analysts revised expectations for sales from roughly 17.5 million to 16.7 million EVs, this still represents a 20% increase from last year’s forecasted total.

Tesla remains the market leader but more options from the rest of the industry are an exciting development for dealers ready to jump into the EV pool. And automakers are helping to pave the way to more sales. General Motors recently announced it’ll furnish $7,500 in incentives for models that no longer qualify for federal tax credits. It remains to be seen if others will follow suit.

More Effort to Sell Vehicles

As we officially bid farewell to the seller’s market that defined the last several years, buyers will have more options when it comes to where they take their business. Especially in light of expectations that automakers will offer more incentives in 2024 to make their brands more affordable and attractive to buyers. In sum, dealers will have to exert more effort to attract and convert shoppers than in previous years. There are a few key actions dealers can take to post strong revenue in a buyer’s market.

• Hone sales skills. For the past few years, customers have had little negotiating leverage. That changes in a buyer’s market. It’s time to hone sales skills that may have atrophied. Focus on lead response times, transparency in process and pricing, and ways to optimize the customer experience to prioritize a streamlined sales process that moves effortlessly from online to on site.
• Shorten the sales process. Customer satisfaction soars when buyers are in and out of the dealership in two hours or less. The use of digital retail tools online and in-store, moving away from paper-based F&I processes, and picking up deals exactly where the customer left off all help to cut time at the dealership.
• Step up EV preparedness. If your dealership is revving up to sell EVs, a few key actions can help pave the way. These range from training initiatives to ensuring salespeople are well-versed on benefits, comparisons to gas-powered vehicles, and the ins and outs of federal tax credits to encyclopedic knowledge of your area’s charging options. EVs are new and unproven for many consumers so brand loyalty is low. Step up to the plate now and cultivate loyalties before your competitors.

2024 marks the return of a competitive auto retail market with the buyer back behind the wheel. Now’s the time to polish sales skills and hone the customer experience to increase sales, customer loyalty and retention down the road.