Vehicle supply chain problems and semiconductor shortages may have abated, but car affordability remains an issue across both the used and new car markets, per a Cars Commerce July Industry Insights Report.
Cars Commerce operates Cars.com, an online vehicle marketplace that recorded 615 million visits in 2023, according to a securities filing. The company’s monthly insight reports provides a glimpse of automotive buying patterns in the U.S. and Canada, as well as the state of pricing in the new and used car markets.
After a few tumultuous years of constrained vehicle inventory and price increases, new car prices remain high with an average purchase price of $49,000, the Cars Commerce report said. Though the supply of new cars has increased, new inventory is concentrated on mid- and high-priced vehicles.
More affordable vehicles are becoming harder to find, per the report. There were just 333,000 new cars priced below $30,000 on the Cars Marketplace in July, compared to 1.1 million in 2019.
“To get prices back on track, the industry would need to add more than 750,000 sub-$30,000 vehicles to the market, the same number of under-$30K vehicles lost since 2019,” Rebecca Lindland, senior director of industry data and insights at Cars Commerce, said in a statement.
At the same time, the used vehicle market is also facing affordability shortages. Used car prices have declined by 6% since July 2023, and inventory has increased by 1% in the past year because of cars priced below $30,000. But the market remains short of low-mileage used vehicles that cost under $20,000.
According to Lindland, in July, used cars for sale at $20,000 or less had an average mileage of 93,000 miles — 33% more than the average mileage of used cars priced under $20,000 over the past five years.
“These high-mileage vehicles may require significant service to remain roadworthy,” Lindland said, which suggests that the true cost of such vehicles may be higher than the listing price.
However, the electric vehicle market is becoming more attractive as inventory increases and prices decline — especially in the used market, according to the report. Year over year, inventory of used EVs increased by 31%, with used EV prices falling by 10.4% since July 2023.
The improved market contributed to an increase in interest in used EVs, as the Cars Marketplace saw an uptick of 19.3% in July searches for used EVs as compared to July 2023.
