If you're in the market for a vehicle, you might want to consider getting your shopping done now.
Car prices are experiencing downward pressure as interest rates remain higher than anticipated, leading to increased loan costs for consumers, according to Brian Moody, Autotrader's executive editor.
In response to this trend, manufacturers are offering incentives for select models to attract buyers and stimulate sales. Incentives were up by 59% in July compared with a year ago, Moody said. The average incentive last month was 7% of the transaction price. That's up from 6.4% in June.
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Incentives are higher across most brands compared with a year ago, with electric cars seeing incentives that were 73% above the industry average in July.
However, Moody said it's important to note that these incentives are selective and vary by model. Buyers are more likely to find incentives on less-popular vehicles that dealers are eager to move off their lots.
Luxury SUVs, small SUVs and minivans are unlikely to offer incentives due to their consistent demand. In contrast, vehicles like the new Toyota Crown sedan may feature attractive deals.
According to Moody, when consumers visit car lots, they might encounter one model with no incentives, while a similar model next to it could have $1,000 cash back and 0% financing for 60 months.
Since the dealers aren't ubiquitous across all brands, "it requires a little extra research on the part of the consumer or the shopper," he said.
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This isn't to say that there won't be deals around the holiday season. In fact, a lot of dealerships will want to fill their lots with 2025 models as close to the beginning of the year as they can, which means they'll offer deals on the outgoing 2024 models, according to Moody.
The deals "will take on its own specific flavor based on the economic conditions of today," Moody said.
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He also warned that car shopping is quite similar to homebuying because the cost of the car will be dependent on interest rates.
Moody said that if interest rates go down, demand is likely to rise. When that happens, car prices will rise.
