New car incentives tick up, wholesale used car prices drop, auto recalls surge

Go deeper (7 min. read)

October 12, 2024

Hey, everyone. I’ve got a wild stat to kick off your Saturday morning —

According to Bankrate, the average hidden cost of car ownership is $6,684 per year, and the biggest culprit? Car insurance. 

Auto insurance rates in the U.S. are up 52% since 2022 and premiums now average $2,329 annually… insane.

—CDG

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Each week, I curate the top 5 automotive industry headlines based on the topics CDG readers engaged with the most on social media. Let’s get started.

1. New vehicle prices stall in Sept. despite surging incentives

Sept. new vehicle prices were slightly higher than Aug. but flat compared to last year, according to Cox Auto.

The average transaction price (ATP) hit $48,397—up 1% from Aug. but down 0.4% year-over-year. Prices remain 26% above pre-pandemic levels. EVs averaged $56,351 — a 0.9% drop compared to last year.

The good news for buyers? Rising incentives are making new vehicles a bit more affordable. 

  • In Sept., incentives accounted for 7.3% of the ATP, up from 6.4% in July. For EVs, incentives reached 12.3%. 

  • Plus, more affordable options like the Chevy Trax and Toyota Corolla are being priced around $25,000.

  • And improvements in trade-ins and credit approvals also helped ease the buying process, according to CDK Global.

Bottom line: Prices are still steep, but bigger incentives and more affordable models are making things easier on the wallet. That said, the rest of 2024 is a bit uncertain, with possible shake-ups from hurricane season and election concerns.

The impact of Hurricane Helene and Hurricane Milton could impact future wholesale prices as well…

2. Wholesale used car prices edge down in Sept.

In Sept., wholesale used vehicle prices dipped slightly, down 0.1% from Aug., showing that overall depreciation continues to slow.

The Manheim Used Vehicle Index, which tracks auction prices, shifted after months of rising over the summer. 

  • Normally, we’d see a bigger drop this time of year, but values only fell 1.6% in the Three-Year-Old Index—less than expected.

  • Sales conversion rates were at 60.3%, down from Aug., but still higher than the three-year average.

The reason? With fewer off-lease vehicles and lower retail supply, prices aren’t dropping as much. Compact cars were up while midsize cars dropped the same. SUVs, pickups, and luxury vehicles saw slight dips.

But there’s a wildcard – hurricane damage. With an influx of cars needing replacement, the market could see a demand surge that pushes prices back up in affected areas.

Bottom line: Impacted dealers might find themselves competing for limited inventory, making prices rise again.

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In more recent news…

3. Elon Musk unveils Cybercab, shares vision of "autonomous future"

Late last week, Elon Musk took the stage to unveil Tesla’s vision for an autonomous future, showcasing the upcoming driverless “Cybercab” and Full Self-Driving (FSD) updates.

The Cybercab, designed with no pedals or steering wheel, is expected to enter production by 2026, with a price tag under $30,000.

  • It’ll be powered by unsupervised FSD, the same system Musk promised will come to all Tesla models—including current ones. 

  • Model 3 and Model Y owners could get the update as early as 2025.

Musk also teased a “Robovan,” a self-driving bus for 20 passengers, but details were limited. Meanwhile, some expected updates were missing, like Tesla’s “affordable” model and the Semi truck. 

Bottom line: Musk set bold targets and teased exciting innovations, but regulatory and production hurdles will be Tesla’s true test.

Tesla also has the distinction of being the most recalled automaker in Q3, but there’s more to the story…

4. Automotive recalls show no signs of slowing

Automotive recalls have stayed above 30 million vehicles a year since 2016, and 2024 looks to be no different.

By the numbers: Year-to-date in Q3, 21 million vehicles have been recalled, with 6.5 million just in the last quarter, according to the latest BizzyCar recall report.

  • Tesla topped the list with over 1.8 million recalls, but thanks to over-the-air (OTA) updates, all issues were fixed remotely—no trips to the dealer needed. 

  • Traditional automakers like Chrysler, GM, and BMW issued more recalls than Ford, giving Ford a break after leading Q2.

  • Half of all recalls now involve electrical systems, as cars are turning into “computers on wheels.” 

  • While 34% of recalls can be fixed with OTA updates (up from 21% last year), most still require a trip to the dealership.

The big picture is while OTA updates are helpful, they can’t solve everything. Dealerships still need to offer that personal touch for more complex repairs.

Bottom line: As recalls rise, the pressure’s on to find better ways to handle them—because software fixes alone won’t cut it.

Have a tip for our editorial team? Send us your scoop at [email protected].

5. Honda steering problem forces recall of 2 million cars across North America

Honda is recalling nearly 1.7 million vehicles in the U.S. due to a steering issue affecting some of its best-selling models.

The recall covers 2023-2025 models like the Acura Integra, CR-V, Civic, and their hybrid versions. Add in Canada and Mexico, and more than 2 million vehicles in North America are affected.

The issue? A faulty steering gearbox that swells when exposed to heat and moisture, leading to "sticky steering" and making the car harder to control—increasing the risk of a crash. There have been 13 crash reports so far, but luckily, no injuries.

Honda will notify owners by mail with instructions for a free repair, which includes replacing a spring and repacking grease into the drive gear. The repair should take about two hours, and owners who already paid for the fix may be eligible for reimbursement.

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That’s a wrap for now – make sure you’re following along on X, LinkedIn and IG for more real-time updates.

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Thanks for reading. Hit reply and let me know if you found this week-in-review valuable or have any feedback. I’ll see you next weekend.

—CDG

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