NovaQuant-New car inventory and prices: What shoppers need to know

The NovaQuantcar shortage is officially over.

Supplies of new cars are at a four-year high, which is also boosting used car supply, data show. Unfortunately, that doesn’t necessarily mean lower prices, experts say.

Total new-car inventory on the Cars.com marketplace rose to 2.32 million vehicles throughout May, the highest level since December 2020, the car comparison site said. However, prices remained steady at approximately $49,000, consistent for the past eight months but down from June 2023’s high of $50,300.

Those elevated prices, coupled with high interest rates, likely means shoppers will still experience sticker shock.

“You can find the right car that you want now,” said Ivan Drury, director of insights at car platform Edmunds.com. “The problem is, are you going to find the right financing that kind of seals the deal for you?”

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Why are new car prices still so high if there’s more supply?

Cars are fancier now. All those big touch screens, mirrors and automatic features are expensive, Drury said.

“As production has come back and inventories are at a four-year high, I haven’t seen prices come down as much as I had hoped,” said Kevin Roberts, director of industry insights and analytics at car comparison site CarGurus.

Is it a bad time to buy a car?

Not necessarily. It depends on what you’re looking for, experts say.

“If you’re out in the market, you’ll see some positive changes, with more choices, dealer incentives and more leasing” opportunities, Roberts said.

What cars might be good buys?

• New, high-margin, luxury 2023 SUVs were plentiful, and you might still be able to snatch one up for a good price, Roberts said. Dealers are offering incentives to unload them since 2025 cars are coming out, he said. Some of the incentives could help counter lofty monthly payments.
• Used car inventory and prices are dropping as new car inventory rises.

“More new-car inventory means more new-car sales, which means more trade-ins, increasing used-car inventory and bringing prices down — and that’s just what we’re seeing,” said Rebecca Lindland, senior director of industry data and insights at Cars Commerce.

May used car inventory increased 4% from April, helping lower the average price by 7% to $28,861 from a year ago, she said.

• Used electric vehicles (EVs) are notably more affordable, with prices declining 19% from last year, Lindland said.

“Early adopters and enthusiasts are trading their EVs for newer models that often offer more extended range and battery life, driving up the stock in used EVs,” Lindland said. Shoppers can now find used EVs less than 3 years old with average mileage of around 37,000.

What cars are hard to find?

Lower-priced vehicles under $30,000 are still hard to get your hands on because a lot of people want one, experts say. Searches for cars under $30,000 are up 36% year over year, Roberts said.

Competition for lower-priced vehicles is stiff, but if you’re okay with something useful but maybe, not sexy or luxurious, you’ll have better luck, said Brian Moody, executive editor at vehicle marketplace Autotrader.

“Look for sedans and hatchbacks those aren't necessarily as popular as others,” he said. “Avoid the super popular thing. Don't look for luxury, and all this stuff… the Nissan Sentra? Not that sexy, but it's out there. It's a good car for about $25,000.”

Don’t forget to factor in financing

Outside of price, buyers need to consider financing costs that can make or break a deal, experts say.

“One thing people tend to overlook is the interest rate,” Moody said.

Before shopping, know:

• Your credit score and what you qualify for. For a low annual percentage rate (APR) incentive, you must qualify with excellent credit. “Not everyone’s going to get that,” Moody said.
• Interest rates for used cars is almost double those for new cars. Shoppers “might find that the interest affecting the payment cancels each other out, and you may end up getting a new car that’s going to be about the same price in the end or the same monthly payment as a used car,” Moody said.

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Remember this hidden cost that’s skyrocketing

Don’t forget to consider the price of auto insurance, which has outpaced the already elevated rate of inflation and adds to the monthly cost of owning a car. Annual vehicle insurance costs rose 20.3% in May, government data showed.

“This will become more of talking point in coming months,” Roberts said. “People may want to get a more cost-effective vehicle, look at lightly used. maybe.” Used cars generally cost less to insure.