2025 auto market: affordable new car inventory rises, used car supply shrinks

Supply levels of new cars priced at or below $30,000 skyrocketed 64% in 2024. (4 min. read)

Author

Colin Velez
January 17, 2025

Dealers are in for another year of surprises, some good and some not so good, with shifts impacting both the new and used car markets.

Big picture: Last year saw a beneficial jump in sales as bigger incentives and more inventory helped drive demand for vehicles. Those factors along with some broader economic shifts are setting up some interesting trends for 2025 that will impact how retailers and consumers interact with the market, according to Cars.com’s 2024 Auto Market Year-In-Review report.

Note: Data used in this article is based on Cars.com’s marketplace and may not 100% reflect broader industry trends.

Zooming in–New Vehicles: On the new vehicle side, tough financing conditions have driven monthly payments higher, leading shoppers to search for cheaper options.

  • The 29% increase in average new car prices since 2019 has caused the number of buyers paying $600 or more a month to hit 62%, nearly double the amount before the pandemic. Owners paying $800+ now account for about 35% of the market.

  • But despite the increase in monthly payments, new vehicle prices have effectively frozen, declining just 1% year-over-year in 2024.

  • With such hostile conditions, manufacturers and dealers have taken note of buyers’ challenges. Supply of affordable new vehicles (sub $30,000) skyrocketed 64% last year, outpacing all other segments in inventory growth.

Although the average number of days it took new vehicles to sell hovered around 70 days throughout 2024, cheaper vehicles saw much faster turnover as would one expect. For instance, the Toyota Camry hybrid took only 15 days to sell, whereas the Dodge Challenger waited 186 days.

Zooming in–Used Vehicles: With new cars being unaffordable, many consumers are turning to the preowned market in hopes of finding better deals. This is good for used car sales—but it might be more difficult for dealers to meet demand in 2025.

  • Used cars are seeing faster affordability improvements than on the new side, with average listing prices falling 5% last year although declines slowed down after Q2.

  • The coming months might undo some of this progress, however. Reduced production over the last few years means that dealers are facing a nearly 7% decline in inventory levels for cars aged zero- to six-years-old.

  • This could have the effect of causing prices to increase for newer vehicles, especially in the spring when tax refunds lead to demand spikes. With fewer recent model-year cars available for sale, customers may also be forced to opt for cars with a higher mileage than they’d prefer.

There is one area where buyers may get some relief. Used electric vehicle inventory jumped 35% in 2024, while prices declined 15%. Tesla models saw especially big price cuts, falling an average of 25%. Although non-Tesla models were only 8% cheaper than in 2023, their supply growth outpaced the EV-only brand by 21%. With inventory on the rise, retailers will be looking to sell these vehicles quickly, boosting the possibility of getting a better deal.

Looking ahead: Another hiccup impacting new and used car sales this year is the ongoing decline in trade-in values.

  • Trade-in values are now at a four-year low, normalizing after the pandemic caused prices to spike. Mainstream and luxury brands saw values drop 6% (-$1,642) and 4% (-$1,941) last year, respectively.

  • Lower values could make it more difficult for buyers to afford their purchases, especially with new car prices refusing to budge.

Bottom line: 2024 was a strong year for dealers, but challenges are going to persist into the months ahead, complicating business. However, with incentives returning and interest rate cuts on the table, retailers also have plenty to look forward to. Paying close attention to the market and exceeding buyer expectations for service will be key to outmaneuvering the competition in 2025.

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