Experts Think the Car Market Will Return to Normal in 2024. Here's What It Means for Buyers

Recently, I was researching used vehicles online, looking at a few potential third-row SUVs, and I was shocked at what I saw. For the first time in several years, the vehicle prices almost seemed reasonable.

After experiencing astronomical highs since the pandemic, could the car-buying market actually be returning to normalcy? The latest Cox Automotive report points in precisely that direction.

The company said in its recent 2024 automotive market predictions report that the "chaotic" times of the past few years are ending, and "normalcy" is what car buyers will see this year.

Finally.

New car prices have increased 23% over the past three years, according to Kelley Blue Book, and those skyrocketing prices caused used car values to rise along with them.

Pandemic-induced labor and semiconductor shortages caused a massive lack of vehicle supply that pushed car prices higher, along with the effects of rampant inflation.

But Cox Automotive thinks the worst is over, and the car buying will shift from a seller's market to more of a buyer's market this year.

Why the car market could return to normal

Cox says new-vehicle inventory will increase this year, returning to levels not seen since before the pandemic, making it more likely dealers will have to offer incentives and discount prices to get buyers in the door.

For some context, there will be about 3 million more new vehicles available for sale in 2024 than there were at the height of the semiconductor shortage a couple of years ago, Cox said.

That's good news for buyers all around, and it comes at a time when receiving a federal tax credit for electric and hybrid vehicles is getting easier as well. The government is offering up to $7,500 for some new EVs and hybrids, and this year, buyers will be able to receive the tax credit at the time of purchase, instead of when they file their taxes.

But while car prices are likely to come down and incentives may go up, there are a few costs that car owners will still be digging deep into their pockets for.

Car insurance and repairs are still expensive

Inflation is cooling, but there are many expenses that aren't feeling the effects quite yet, including the cost of car repairs. The Bureau of Labor Statistics says it costs 17% more right now to repair a vehicle than it did the same time last year.

Adding to that financial pressure for car owners is that car insurance prices are up 19% over the past year and are unlikely to come down in 2024.

Rates have increased for several reasons, including a spike in crashes, replacement part shortages, high vehicle prices, and higher repair costs. Auto insurance costs have ballooned so much over the past few years that it now ranks as Americans' sixth-largest financial concern, following just behind rent/mortgage payments and energy bills.

All of this means that while 2024 may be a good year to purchase a new car, buyers may also want to set aside some extra money for repair costs and insurance. It may also be a good idea to compare car insurance companies to see if you can get a better rate.

All of this talk about expensive vehicle costs has me questioning the idea of replacing my SUV and moving in a completely different direction. How much does bike maintenance cost these days?