The Automotive Industry in 2024: Trends, Expectations, and Consumer Dynamics

The Automotive Industry in 2024: Trends, Expectations, and Consumer Dynamics

As we approach 2024, the automotive industry is poised for significant changes influenced by consumer preferences, technological advancements, and economic factors. This article delves into what we can expect in the automotive industry in 2024, drawing insights from recent trends and studies.

Declining New Car Prices and Production Surplus

In 2023, new car prices witnessed a decline, with Kelley Blue Book reporting an average selling price of $47,936 in October. This decrease is a trend that's expected to continue into 2024. A surplus in global car production, estimated at 5 million vehicles, will likely lead to further price cuts to facilitate sales.**

Digital Transformation in Car Buying

The automotive industry is experiencing a significant digital shift, with the global online car buying market projected to grow from $294.2 billion in 2022 to $563.8 billion by 2028. This trend is reflected in consumer behavior, with approximately 38% of shoppers expecting to complete the entire car buying process online. Despite the growth of digital platforms, traditional aspects like test drives remain crucial to consumers. Dealerships are responding by enhancing their digital offerings, with a focus on transparency and efficiency in financing and pricing.**

This digital expansion is not just in sales but also in after-sales and services, with online vehicle retail revenue expected to increase five-fold by 2025. The industry's revenue pool is diversifying, moving towards on-demand mobility and data-driven services, potentially adding $1.5 trillion in revenue by 2030. The challenge for dealerships lies in balancing digital convenience with the essential personal aspects of car purchasing, ensuring a seamless and transparent car buying experience for consumers.**

Consumer Expectations and Dealership Adaptation

As we look at consumer expectations in car buying in 2023, there's a noticeable shift in the way consumers approach vehicle purchases. The current market dynamics have altered traditional car shopping methods. For instance, consumers are now more likely to research cars online before visiting a dealership, and the trend of completing a significant portion of the buying process digitally is on the rise. There's an emphasis on being well-informed about the vehicle's pricing and availability before stepping into a dealership. Additionally, with inventory challenges, consumers are advised to be flexible in their choices, considering various manufacturers, models, and even expanding their search beyond local dealerships to find the right vehicle at the right price.**

Dealerships, on the other hand, must adapt to these evolving consumer expectations by enhancing their digital presence and tools. This includes maintaining accurate, real-time online inventory information and offering comprehensive digital resources for vehicle research and price comparisons. Dealerships are also encouraged to invest in digital tools that streamline the financing process, as this has become a critical aspect of the customer experience. The combination of a strong online presence and a customer-centric approach in dealerships can significantly enhance the overall car buying experience, meeting the modern consumer's needs for efficiency, transparency, and convenience.

Key Areas for Change

Four main areas require significant change to meet consumer expectations:

1. Financing Paperwork: Consumers favor completing credit applications and financing paperwork online.

2. Deal Structuring: There's a preference for initiating negotiation processes online.

3. Test Drives: Consumers seek more convenient, pressure-free test drive experiences.

4. Service: Access to local service centers and more convenient servicing options are in demand.

Leasing and Ownership Models

In 2024, the automotive industry is set to simplify leasing models to cater to consumer preferences for clarity and ease. Many manufacture are exploring and beta testing subscription style leasing models. With many consumers finding traditional leasing complex, there's a growing demand for more straightforward, transparent leasing options. Manufacturers are responding by considering simplified lease agreements, offering clear summaries of terms and conditions. This approach aims to demystify leasing, making it as understandable as standard loan processes, thereby enhancing consumer trust and satisfaction. The evolution of leasing models is expected to attract a wider customer base, benefiting both consumers and dealerships by fostering a more transparent and informed vehicle leasing experience.**

Online Car Buying Satisfaction

A majority of consumers who purchased cars online reported high satisfaction, contrasting with lower satisfaction rates for traditional dealership purchases. This trend, particularly strong among younger demographics, is reshaping the retail landscape.

Economic and Interest Rate Outlook

Economists predict a potential reduction in the federal funds rate in 2024. However, auto loan interest rates may continue to rise until then. Dealerships will need to navigate these economic conditions while meeting consumer demands for favorable rates.

In summary, the year 2024 will likely witness the automotive industry adapting to technological advancements, evolving consumer preferences, and economic changes. Dealerships must embrace digital transformation, offer transparent and efficient purchasing options, and adapt to changing economic conditions to stay competitive and meet consumer expectations.

**Sources: Some information for this article has been extrapolated from the following sources and sites: Santander, CDK Global Reports, Kelly Blue Book Reports and these specific articles - https://www.findthebestcarprice.com/car-buying-statistics-trends/ https://www.capitalone.com/about/newsroom/car-buying-outlook-report-2023/ https://santanderconsumerusa.com/blog/7-things-to-know-if-youre-buying-a-car-in-2023