America’s car dealers spent much of 2024 dealing with an inventory glut. But Americans bought a lot of cars in December, bringing the nationwide supply of new cars for sale back to something close to normal.
That’s not great news for car shoppers. An oversupply means lower prices as dealers compete for business. With fewer cars to sell, they face less pressure to drop prices.
The situation remains different from brand to brand. Some brands remain overstocked. A handful are undersupplied. But many are now near where they like to be.
The Average Sale Price Is Unusually High Right Now
The average new car buyer paid $49,740 last month. That’s not far from the all-time high set in December of 2022.
But that fact can be misleading. In late 2022, the auto industry was low on cars to sell due to COVID-19-related supply problems. Americans were paying more than sticker price for the average new car because they were lucky to find one that met their needs.
Last month, dealers had plenty to sell. Americans paid a lot because they wanted to. We bought a near-record number of luxury cars, with cars priced over $80,000 selling particularly well.
It’s still possible to find an inexpensive car at the moment. Knowing which brands to shop will help.
Related: Is Now the Time to Buy, Sell, or Trade-in a Car?
The 75-Day Rule
Car dealers measure their supply of new cars in a metric called “days of inventory” – how long it would take them to sell out of new cars at today’s sales pace if they didn’t acquire more.
Every dealership has its own target based on how their community shops. But most aim to keep about 60 days’ worth on the lot, with another 15 days’ worth on order.
Fewer than that can cost them customers, as they might not have the combination of colors and features you’re looking for. More costs them money. Dealers generally don’t own the cars on their lots. They’re making monthly payments on them through a complex loan arrangement.
The national average for automakers was a 75-day supply of new cars in December.
The Oversupplied
The industry average may have settled down to normal, but averages are made up of outliers. Some brands still stock over 100 days’ worth of new cars. They include truckmakers like Ram, mainstream brands like Hyundai and Nissan, and luxury marques like Lincoln.
Dealerships for those brands are likely to offer heavier incentives this month as they attempt to bring their inventories down.
The Undersupplied
A handful of brands are drastically understocked. Toyota and its Lexus luxury division both have less than half the normal inventory target. BMW and Honda are also well under. Those dealerships may have trouble finding the precise car you want and are less likely to discount prices this month.
Incentives Exist, but They Take Research to Find
The average new car sold in December included a discount of about 8% off the advertised price. Some brands discounted more heavily than others.
Related: The 10 Best Car Deals in January
Nissan, Volkswagen, and Ram provided incentives above 13%, while Toyota, Land Rover, and Porsche kept their incentives below 5% of the average transaction price.