Auto industry sees 'signs of stabilization': Analyst

The auto industry has faced various obstacles, from tariffs and dips in electric vehicle demand to auto worker strikes. It has also been challenging for consumers as prices for used cars have been higher, though shoppers recently felt some relief. Cars Commerce Senior Director of Industry Data and Insights Rebecca Lindland joins Wealth! to give insight into the auto industry moving forward and what consumers need to keep in mind when shopping for vehicles.

On the shifts occurring in the industry, Lindland claims, "We do see some signs of stabilization. So when we look at particularly month over month, when we look at year over year, we are still seeing some large swings. But we're grateful to see some stabilization here. One of the things that kind of keeps popping up, and we look at and say, this is our new normal, is high car prices."

She reminds consumers looking for a new vehicle to visit sites like Cars.com: "You can do some of the tools like payment calculators to figure out what really suits your budget. Keeping in mind that we're seeing a bit of a shortage on the used car side with newer used vehicles because, as you said, more people are keeping their car longer and fewer people are turning in their leased vehicles. So we're really seeing a shortage. We had softer sales in new car, and that's feeding into a shortage in used vehicles as well. "

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This post was written by Nicholas Jacobino

Video Transcript

Well, a new report from cars commerce is highlighting recent shifts in the auto industry that point to some stabilization and more consumer choice across new used and electric vehicle sectors here.

With more.

We've got Rebecca Lindland who is the Cars Commerce, Senior Director of Industry data and insights.

Great to see you here and thanks for hopping on the show with his uh Rebecca.

It it has been a volatile year for for autos.

Is that gonna be easing or normalizing here in the near term?

Well, thanks for having me on Brad.

You know, it's been actually a volatile five years frankly for the automotive space, but we do see some signs of stabilization.

So when we look at particularly month, over month, when we look at year over year, we are still seeing some large swings, but we're grateful to see some some stabilization here.

One of the things that kind of keeps popping up and we look at it and say this is our new norm is high car prices.

So the average new car is running at about $49,000.

That's up from around 37,000 in 2019.

So we are seeing these huge increases.

And what we're not seeing is any kind of erosion in those prices.

We're coming down a little bit by a couple of $100 maybe year over year.

But we're not seeing the thousands of dollars that we would really need to see, to get back to those pre pandemic levels.

What, what does it seem in, in the calculus for purchasing a car right now for consumers out there that are in the market, there were times even within these past five years where it made more sense to purchase a new vehicle versus a used one because of the lifetime value that you would perhaps get out of that deal instead of going used.

What is, what is the kind of mix of the thought process right now?

I think that we're seeing consumers that are shopping both for new and used.

There's a lot more overlap these days when it comes to pricing of used vehicles because used vehicles have also increased by over 30%.

So there's a, there's more used vehicles that are almost at parity in some cases with a new vehicle.

The best thing in my mind is for consumer to go to a site like cars.com, you can do some of the tools like payment calculators to figure out what really suits your budget keeping in mind that we're seeing a bit of a shortage on the used car side with newer used vehicles because as you said more people are keeping their car longer and fewer people are turning in their leased vehicles.

So we're really seeing a shortage, we had softer sales in the car and that's feeding into a shortage in used vehicles as well.

What are we seeing in the electric vehicle landscape?

I mean, we've continued to hear from some of the major autom automobile manufacturers about how they've had to readjust their own timelines and ambitions for really seeing mass production equates to mass purchases and deliveries and whatnot.

So, what is the moderation that we're seeing there?

Yes.

So we just had Volkswagen announce that they're not going to bring their ID seven sedan to the US quite yet.

So they've just announced that this morning, we are continuing to see volatility in the EV market space.

And part of that is driven by, as you said, new vehicle launches coming in really a change in strategy in many cases, but we do see a positive for consumers is we've gone from this hand raising inventory stock.

So you have to say, hey, I know I want to purchase this vehicle.

I'm gonna put a reservation in and buy it next year.

Now, today we actually are seeing stock, traditional inventory.

You can go to a manufacturer and go to a dealership rather and test drive an EV that you may want to consider.

And of course, there's a lot more choices.

There's so much more variety in the EV space.

So again, we could, we, uh we um I'm sorry, we encourage consumers to go onto the site, look and see, read about the new evs that are out there because there's a tremendous this supply.

We also are seeing more used, used evs coming into the market and those prices are also coming down as well.

So there's a lot of volatility still when we think about the, the EV market, but supplies up by 40%.

So there's a lot more choices out there.

Rebecca just lastly while we have you here.

When CP I came out last week, I, I posted this graphic that our, our Yahoo finance team created to my Instagram story just talking about all of the places where inflation is and isn't right now.

And I got a remarkable amount of responses just about the auto insurance side of it.

How is that also changing the type of vehicles that people are willing to buy into and the thought process and consideration going to sign on the dotted line for a car?

Absolutely.

This again, factors in you have to look at the total cost of ownership.

Anytime you're buying a vehicle, you have to look at things like whether even on an EV side, is it worth charging or is it worth just paying for gas doing all of those types of calculations?

Absolutely factor in your insurance.

We're seeing huge swings in insurance prices.

And the last thing that I want a consumer to do is to buy a car they can't afford.

Right.

Just like in the housing that you've been talking about, you don't want to be house poor.

You don't want to be car poor either.

We actually recently released a survey that showed the best valued vehicles and something like the Kia Forte, which has terrific features, great safety retails for just over $20,000.

There's a four vehicles out there.

You just need to do your research on them.

And I just want consumers to know that a site like cars.com, we're here for you.

We've done so much of this research for you and, and we're happy to help Rebecca.

Great to speak with you here today.

Thanks so much for taking the time.

Rebecca Lindland, who is the Cart Commerce, Senior Director of Industry data and insights.

Look forward to checking back in, in the future.