(NewsNation) — The U.S. auto market should return to a state of “normalcy” in 2024, according to a forecast published Wednesday by Cox Automotive.
The automotive services and technology provider says after years of shortages driven by the pandemic, vehicle supply is back, which should place downward pressure on prices.
“A decade from now, when we look back at the years immediately following the global pandemic of 2020, we’ll be awed by the dramatic swings and unprecedented circumstances the economy and auto market endured,” Cox Automotive chief economist Jonathan Smoke said in a news release. “The past four years have been chaotic, even by auto industry standards, and have shifted many normal seasonal patterns out of whack, which adds to the difficulty of forecasting what comes next.”
Average auto sales prices peaked in December of 2022 just over $47,300, with vehicles in short supply because of the global chip shortage that limited production. Some dealers were able to charge over the sticker price to buyers who needed a new ride or had the money to get one.
But the chip shortage gradually eased last year to the point where it’s nearly over, and assembly lines are running at near normal speeds.
Cox estimates that new vehicle sales will increase again in 2024 but at a rate of less than 2%. American consumers bought 15.6 million new vehicles in 2023, 12% more than in 2022, the biggest increase in more than a decade.
The used-vehicle market is expected to grow by less than 1%.
The report comes on the same day Honda and Toyota said their total sales in 2023 were up 33% and 6% from the year before, respectively. GM also reported a 14% increase in sales.
Honda and Toyota reported strong growth in sales of their electric and hybrid vehicles. EVs and hybrids accounted for over one-quarter of Honda’s sales and nearly one-third of Toyota’s sales.
Cox sees 2024 as being the “year of more” for EVs, including more models, incentives and discounting.
“Cox Automotive still expects that electric vehicle sales in the U.S. will exceed the 1-million-unit record set in 2023,” the forecast states. “Furthermore, electric vehicles, plug-in hybrids, and hybrids combined are likely to account for almost 24% of the market, with electric vehicles alone accounting for more than 10% of total sales.”
Those projections are in spite of the fact that fewer EVs now qualify for the full $7,500 federal tax credit due to more stringent component sourcing requirements established in the Inflation Reduction Act.
The provision barred vehicles including components or critical minerals from “foreign entities of concern” from being eligible for the credit. In November, the Biden administration issued rules for determining which entities fall under this disqualification. This includes companies fully or partially controlled by the governments of China, Iran, North Korea or Russia.
In a list published this week, the federal government identified only five cars that qualify for the full $7,500 credit. Three are Tesla models and one is the Chevrolet Bolt, which is being discontinued. The fifth is the Ford F-150 Lightning.
Other EVs and hybrids are eligible for half the credit at $3,375.
“Although fewer electric vehicles (EVs) may now qualify for the Inflation Reduction Act tax credits due to new guidelines, the federal incentives will still encourage consumers to purchase EVs,” Cox said. “Furthermore, leasing of electric vehicles is expected to increase from approximately 20% to 25%.”
The Associated Press and The Hill contributed to this report.