While many aspects of the industry are returning to normal, automakers and consumers are going to have to deal with some issues that linger like a bad hangover this year. Most of the problems will focus on the price of new vehicles.
The purchasing habits of younger buyers, what people are willing to pay and the factors now in play when it comes to buying a new car, truck or utility are all in a state of flux, according to the results of a new study by Cars.com.
“Throughout 2023, the global auto industry, domestically and abroad, faced uncertainty, including a history-making OEM labor strike. Consumers are feeling the impact of broad economic and political forces, especially in their wallets,” said Rebecca Lindland, senior director of industry data and insights at Cars Commerce.
The expected long-term shift to online shopping AND buying may not have taken hold after all. Baby Boomers and Gen Xers have long been accustomed to buying vehicles at dealerships, but the generations that followed were much more comfortable with technology — and the arm’s length approach to big-ticket purchases that came with it.
Studies showed that millennials and Gen Zs were more likely to start and finish the buying process of a new vehicle online. However, the latest
numbers show that while 16% of millennials plan to continue doing so, Gen Zs are going to be heading into dealerships to closed deals — 80% of them.
But Gen Z bucking norms doesn’t stop there — 42% of Gen Zers bought their first set of wheels between 16 and 18, outpacing 32% of millennials. This rush to buy young isn’t just about style; it signals a fresh wave of enthusiasm for personal car ownership among the youth, according to Cars.com.
Why they buy what they buy
Politics may have the nation divided in many ways, but in one area the country seems to be coming together: Buying American.
American buyers are willing to spend more — 30% more, which double last year’s number — on cars that boost local employment, in fact, nearly half of said they will pay extra for a vehicle that creates U.S. jobs. That really bodes well for the Detroit Three, where half of those surveyed believed those companies have a “significant impact on the U.S. economy.”
Another game changer driving manufacturing stateside is the Inflation Reduction Act, which is fueling domestic electric-vehicle production investments.
How much will it cost?
“As we head into the new year, consumers — regardless of generation or geography — seek affordable solutions to get the vehicle they want with the features they value,” Lindland noted.
With affordability top of mind, nearly half of car shoppers plan to spend under $30,000 on their next vehicle purchase. But only about 12% of new cars are priced in that range, as automakers produce higher-margin products.
With high interest in this price range and low inventory, new budget-friendly models on Cars.com are selling faster than pricier rides — new vehicles under $30,000 sell an average of 19 days faster than new cars over $30,000.