You might’ve heard us say at “Marketplace” that consumer spending makes up about two-thirds of this economy. It’s been a huge contributor to the strength of the American economy this year. And last month, consumer spending and retail sales both rose again, driven largely by an increase in car sales.
Now is actually a decent time to buy a car, if you’re in the market for one. “There’s a lot more inventory than there was in the last several years,” said Patrick Olsen at Carfax.
If you’re considering a new car, he added, many dealerships are also offering incentives, like lower interest rates on loans than you could get from a bank and, in some cases, straight-up discounts.
“A lot of dealers have a lot of cars that they want to move. This is the time of year to get rid of the ’24s and make room for the ’25s,” Olsen said.
There’s evidence in that recent retail sales and consumer spending data that more people have bought cars lately.
In addition to that, new car prices — which had been falling — have ticked up slightly in the last couple of months, said Karl Brauer, executive analyst at iSeeCars.com. The average number of days new cars spend on the lot has dropped a little.
“So that shows an increase in demand and that the cars are moving quicker,” he said.
Two main factors are likely driving this increase in demand for cars, new and used. “I suspect it’s a combination of the prices finally hitting a level that people feel more willing to make a purchase, as well as some replacement of vehicles damaged in the recent storms,” Brauer said.
More than 340,000 vehicles were badly damaged or destroyed this fall during Hurricanes Milton and Helene, according to Carfax. And many people are looking to replace them.
Then there’s the expectations game.
Dan Ives at Wedbush Securities said when it comes to electric cars, in particular, “everyone knows that that tax credit is going to get pulled once Trump gets in office.”
If you buy an EV right now, you can get a $7,500 tax credit for many models. But President-elect Donald Trump has indicated he might get rid of it. “So you’re seeing some buying … in anticipation of that,” Ives said.
And, he said, you’re also seeing some buying in anticipation of possible tariffs, which could drive car prices back up.
But more than anything, Brauer at iSeeCars said, people who’ve needed cars for a while have noticed prices are down and realize this is probably as good a time to buy as any.
“A lot of people have been waiting on the sidelines, and we’ve just hit a threshold now where a certain amount of them finally got off the bench and came into the game to buy a car,” he said.
