Three things to know about new cars

Issue 26

We start off with an apology.

Some of you didn’t get the proper audio version. We apologize for the technical difficulties.

On another note, we’re talking about new cars. We’d love to hear from you and if you have had any massive depreciation in your new cars.

What model was it, and how much? Drop us an email and let us know.

Thanks! 

Key Takeaways

Don’t have much time? Here’s the summary of what we’re talking about:

• The new car inventory is growing, as companies are catching up with lagging logistics and material shortages.

• We're not back to pre pandemic times, but it's getting close.

• However, pricing isn't budging, and new cars are still expensive.

• Used cars are also increasing in value, but the gap in value between new and used has widened.

• The used-car fleet is older in the US, as more people keep their cars for longer.

• We talk about the best and worst years for the Lexus RX

• We discuss the essential tips you must consider if you want to add a sunroof to your Jeep
  

KERN’S CORNER

Here’s what’s happening with new cars!

New car inventory is finally catching up to olden times. So, is this a sign that the craziness is subsiding? To a point, but let's not get carried away.  

You know we love data at Four Wheel Trends, and this week's issue is packed with it.

The latest report on the new-car market's behavior is out, and it's fascinating.

Let's roll back the clock a couple of years to understand where we are right now.

The following chart shows the automotive market's Seasonally Adjusted Annual Rate, or SAAR, which tells us how many cars have been sold and how sales will likely behave during the year. Every season adjusts the rate, and months such as January and June have a drastic impact.

As you can see, sales have been steadily catching up to pre-pandemic levels.

Bold lettering indicates that 2024 is not over, and it's important to note that SAAR can change.

For example, the previous SAAR measurement showed 15.7 million in sales.

The vehicle inventory has experienced a similar steady growth phenomenon. Automotive inventory has grown 39.7% YoY as automakers finally exit the pandemic conflicts that led to material shortages.

This is great news for the automotive industry. More new cars are hitting the market, and sales continue to increase. But what is the most important aspect for buyers?

Price, and in this section, things look less favorable.

The following chart adds another variable to the equation: the US's average price for a new vehicle. 

New cars have never been cheap but, the pricing refuses to budge. However, if you look at the glass half full, we can say that, at least, pricing growth has slowed down and, as you'll see later, this has massive implications. 

So, what are people buying? 

The following graph shows the fastest-growing brands in the mass-market and luxury sectors. There are no surprises at the top, with powerhouses such as Toyota, Honda, and Audi.

What's concerning is that brands under Stellantis ownership aren't growing, and I wouldn't be surprised if they eventually disappear.

After all, Stellantis won't care much about the American markets if its European brands can sell more cars overseas. 

In our previous issues, we've discussed how Stellantis is a boundless ship in the US market. So, we’re intrigued to see what happens.

Then come EVs, which have seen a combination of factors, including a rise in demand (which is logical given the push to EVs), a price drop, and an increase in supply.

However, as this research by McKinsey shows, one thing is buying the EV, and the other one is owning it and dealing with the ups and downs of charging stations. You know it's terrible when nearly half of EV owners want to return to internal combustion. 

Check out this video from Hoovie's Garage about his adventures with the Tesla Cybertruck. It shines a light on a controversial brand, to say the least. 

Then, there's the used-EV market, a combination of words that gives me the shivers. 

Pricing in the used EV market has dropped close to 20% YoY, and it won't slow down because the supply of used EVs increased by 44%. 

By the way, most of the data we've used in this newsletter comes from the report by Cars.com and its research division, Cars Commerce. 

Here's the link to the report if you want to read more about the fascinating changes happening in the industry. 

What about used cars?

One of the most appealing aspects to most Four Wheel Trends readers is used cars. The changes in the new car market have impacted used cars as well, and there's no better way of measuring this impact than by the average price of a used car. 

In 2024, the average price for a used car is $28,861, the largest price gap between new and used cars since 2018. 

Fans of older models hope this trend continues, and perhaps one day, we will return to the pre-pandemic days when you could find a decent used car for under $20,000. 

Although, that's going to be a challenge. 

Though the gap is massive, used cars are still expensive. Just ask CarMax, whose profits dropped 33% due to rising prices in pre-owned vehicles.

Not only that, but people are looking to keep used cars for longer, mainly because they're cheaper to work on and people trust them more. 

The average American fleet is now 14 years old, and as this article points out, the cause is the cost of new cars and a general distrust of EVs. 

So, what are the most popular used cars on sale today?

According to Cars.com, these are the 10 most frequently searched vehicles:

1. Ford F-150

2. Chevrolet Corvette

3. Chevrolet Silverado 1500

4. Porsche 911

5. Ford Mustang

6. Ram 1500

7. Toyota Tacoma

8. Honda Accord

9. Toyota Camry

10. Toyota Tundra

But is this list really a surprise?

What we see here are models that Americans love.

While the research doesn't necessarily show what years people are buying, it's safe to say that most used vehicles range between 3 and 5 years old, and 5 to 7 years old for trucks.

However, don't count out newer used cars.

This quick Kelley Blue Book search shows one of the most coveted trucks with impressive prices. We found a 2022 model with only 21,600 miles for $35,000.

So, what does this all tell us about cars? 

For one, we shouldn't expect new cars to suddenly become affordable. Manufacturers are still looking to make more cash.

However, the madness of 2020 shouldn't happen again. 

(Knock on wood).

Also, if you have used cars, you might have a tiny golden nugget in your hands. Unless, of course, it's a Stellantis product.

Although I'm sure Wranglers will continue to command high prices. 

EVs also play a vital part in consumer behavior, but not for the reasons we believe. At FWT, we're sure that there will be a saturation point soon, and used prices will be pennies to the dollar (not exactly; it's an exaggeration). 

However, buying a new EV may not make sense. 

Finding a used one in good condition will become more accessible soon.

An extremely popular used vehicle is the Hyundai Tucson. Sure, a microwave is more exciting to operate, but the Tucson is reliable, economical, and comfortable. In fact, it cracks the top ten list of most popular used vehicles per trade value. 

If you want to know which are the best and worst years for the Hyundai Tucson, check out our article on the topic. We break down each generation to find the most reliable one. 

BEST AND WORST

What are the best and worst years for the Lexus RX Series?

The Lexus RX series is another vehicle that has always been coveted in the used car market. 

This SUV combines practicality, comfort, and luxury. Plus, it has Toyota's reliability written all over it. 

So, which are the best and worst years? Let's find out in our article. 

TIPS AND KNOW-HOW

Can you add a sunroof to a Jeep Renegade?

I know it sounds crazy, but I've thought about it. A buzzsaw, a Saturday afternoon, and a steady grip should be easy, right?

Well, not exactly. If you've ever considered adding a sunroof to a Jeep Renegade, here's everything you need to know. 

NEWSBITES

Every week, we scour the web for the most essential news. Here’s what you need to know this week:

• We can now build cars at home, and that's the creative escape home mechanics needed.

• An Italian automaker claimed to sell Italian vehicles, but they were made in China. Now they have to pay a lot of money in fines.

• Are self-driven cars safer than human drivers?