The quest for an affordable ride goes way down market, a late-model trade-in that’s in good condition equals a major windfall, enthusiasm for battery electric vehicles is just, meh and, big surprise, kids want cars again.
Those are some of the trends emerging this year according a consumer survey by vehicle research and shopping website Cars.com.
Results are based on 4,000 responses to the survey taken between August 30 and September 7, 2023.
Overall vehicle affordability is an ongoing challenge for many consumers. The combination of low inventories caused by Covid pandemic production and supply chain interruptions, automakers’ preference to convert their product lines to high-profit pickup trucks and SUVs and a pullback on discounts had average transaction prices shooting up to around $50,000.
That’s more than sticker shock. It’s a disqualifier for shoppers on more modest budgets, many of whom now find themselves chasing a windmill that’s closer to a mirage.
“Our survey showed almost half of consumers are planning on spending $30,000 for a new car, but only about 12 percent of new cars are priced at $30,000,” said Rebecca Lindland, director, auto data and insights director at Cars Commerce, the Cars.com parent company, in an interview.
With such a paucity of more budget-friendly vehicles, Lindland suggests consumers concentrate less on the sticker price and more on the total picture.
“Go into your car shopping journey understanding what payment you’re comfortable with, understanding what size vehicle you need, really knowing your requirements and then not overspending, because just like, there’s nothing worse than being house poor, there’s nothing worse than being car poor,” Lindland advised.
It’s also vital, she said, shoppers understand the value of the vehicle they’re trading in. Right now, trade-ins are pulling in lucrative offers because quality used cars are in short supply.
“There’s a shortage of specifically one to five-year-old vehicles,” said Lindland. “But the silver lining is that if people are trading in a vehicle from one to five years old, it’s actually worth almost 23percent more than it would have been in 2020.”
The downside, she warned, is high prices paid by dealers for trade-ins also mean high prices for those shopping for a used car or truck.
There is some evidence prices for some vehicles are moderating. Now that new vehicle production is working its way toward pre-pandemic levels and dealer inventories are growing, consumers have more choices and automakers are more likely to resume discounting.
Indeed the new-vehicle average transaction price in December 2023 was $48,759, an increase of 1.3 percent month over month but down 2.4 percent year over year, according to Kelley Blue Book.
Earlier this week Cox Automotive chief economist Jonathan Smoke declared the end of the seller’s market.
Pricing remains, however, a barrier to some for making the switch to a battery-electric vehicle. That doesn’t mean consumers aren’t concerned about reducing dependency on fossil fuels or protecting the environment, they’re just not ready to go all-in on EVs.
Their fallback plan, for now at least, are hybrids and plug-in hybrids which provide higher fuel economy using a combination of a gasoline engine, electric motor and battery pack. A plug-in hybrid adds the capability of plugging in the vehicle’s battery to recharge it.
Hybrids are not generally as costly as pure EVs and consumers are noticing that. About twice as many are people researching and shopping for hybrids and plug-in hybrids versus a full electric vehicle on Cars.com, according to Lindland.
A key issue, aside from price and charging concerns, she maintains, is the inadequate job being done by the federal government and automakers in communicating how far EVs have come.
“We need to work on the story to say an electric vehicle is such a great vehicle for so many applications, especially now that people are working from home or they’re not commuting this much,” Lindland asserted. “The range has expanded dramatically and you can get an EV that you can drive for hundreds of miles without needing to charge it. Even charging has improved so dramatically so you’re not sitting there for 24 hours anymore. With the level three charger you can charge in half an hour.”
Regardless of what powers a vehicle Millennials, those born between 1981 and 1996, largely preferred not to own one, opting to get around via rideshare or public transportation.
But those born between 1997 and 2012 who make up what’s known as Gen Z, are more open to owning their own rides after seeing that grabbing an Uber or Lyft isn’t necessary a panacea according to Lindland.
Forty-two percent of Gen Zers bought their first vehicles between ages 16 and 18 compared with 32 percent of Millennials, according to Cars.com research.
Not only are they buying earlier, their method for doing so represents a shift.
“The fascinating part that I found really interesting is that 80 percent of the Gen Zers that we surveyed said I want to finish my transaction at the dealership, which I find just wild. Wow. It’s so illogical, but I think they want that authentic experience,” said Lindland. “I think they want to look the person in the eye and understand who they’re buying from, what kind of a deal they’re getting and they want that handshake. They want that human connection.”
Lindland stresses that no matter what price or powertrain vehicle a consumer is shopping for, and regardless of whether it’s new or used, the tools to find the right ride at the right price are free and easy to find online, adding, “There’s so much information out there, and it’s just worth it to do some research.”
