Car prices are finally showing signs of decline after years of record highs, especially for SUVs. Thanks to improved supply chains, rising inventory, and increased competition, buyers now have more negotiating power and better access to affordable vehicles.
Key Takeaways
- Car prices are slowly decreasing: After peaking in 2022, average vehicle prices—especially for SUVs—have started to drop due to better inventory and lower demand.
- SUVs are leading the price drop: Popular SUV models like the Honda CR-V and Toyota RAV4 are seeing price reductions and increased availability.
- New and used markets are shifting: Both new and used car prices are softening, giving buyers more options and leverage at the dealership.
- Interest rates still impact affordability: While sticker prices are down, high auto loan rates can offset savings, so shop around for financing.
- Timing matters: End-of-year sales, holiday promotions, and new model releases are prime times to score deals.
- Negotiation is back: Dealers are more willing to negotiate now than during the pandemic shortage, so don’t accept the first offer.
- Electric SUVs are becoming more competitive: As EV production ramps up, prices for electric SUVs like the Tesla Model Y are stabilizing or dropping.
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Are Car Prices Going Down? The 2024 Outlook
If you’ve been thinking about buying a new or used SUV, you’re probably wondering: are car prices going down? The short answer is yes—finally. After two years of skyrocketing prices driven by supply chain disruptions, semiconductor shortages, and high demand, the automotive market is starting to cool off. For the first time since 2020, average transaction prices are trending downward, especially in the SUV segment.
This shift is welcome news for buyers who’ve been priced out of the market. In 2022, the average price of a new vehicle hit over $48,000, with SUVs often exceeding $50,000. But now, thanks to improved manufacturing, increased inventory, and a slowdown in consumer spending, prices are beginning to stabilize—and in some cases, drop. While we’re not back to pre-pandemic levels, the trend is moving in the right direction.
Why Are Car Prices Dropping Now?
Several key factors are driving the decline in car prices, particularly for SUVs. Let’s break them down.
Improved Supply Chain and Inventory
During the pandemic, automakers struggled to produce enough vehicles due to chip shortages and factory shutdowns. This led to a massive imbalance between supply and demand, pushing prices to record highs. But in 2023 and into 2024, production has largely caught up. Automakers like Ford, GM, and Toyota have ramped up output, and dealerships are finally seeing healthy inventory levels.
For example, a typical Honda dealership now has 30–50 CR-Vs on the lot, compared to just 5–10 in 2022. This surplus gives dealers less pricing power and more incentive to move vehicles quickly.
Cooling Consumer Demand
After a surge in car buying during the pandemic, demand is leveling off. Higher interest rates, inflation, and economic uncertainty have made consumers more cautious. People are holding onto their current vehicles longer, and fewer are rushing to upgrade.
This shift in buyer behavior means dealers can’t rely on scarcity to justify high prices. Instead, they’re offering discounts, incentives, and financing deals to attract customers.
Increased Competition Among Automakers
With more vehicles available, automakers are competing harder than ever. Brands are introducing new models, refreshing existing ones, and offering aggressive promotions to stand out. For instance, Hyundai recently launched the 2024 Santa Fe with a lower starting price and enhanced features, putting pressure on rivals like the Toyota Highlander and Ford Explorer.
This competition benefits buyers, especially in the SUV market, where there are now more options than ever.
SUV Prices: The Biggest Drop in Years
SUVs have been at the center of the price correction. As the most popular vehicle type in the U.S., they were hit hardest during the shortage—and are now seeing the most significant price relief.
New SUV Prices Are Falling
According to Kelley Blue Book, the average transaction price for a new SUV dropped by nearly 3% in the first half of 2024 compared to the same period in 2023. Compact and midsize SUVs, like the Mazda CX-5 and Subaru Outback, are seeing the steepest declines.
For example, the 2024 Toyota RAV4 now has a starting MSRP of around $28,000—down from over $30,000 in 2022. And many dealers are offering additional discounts, especially on base models.
Used SUV Prices Are Also Dropping
The used car market, which saw prices surge by over 40% during the pandemic, is finally cooling. Used SUVs, in particular, are losing value faster than other vehicle types. A 2021 Honda CR-V that sold for $35,000 two years ago might now go for $28,000–$30,000.
This is great news for buyers who want a nearly new SUV without the steep depreciation of a brand-new model.
Electric SUVs Are Becoming More Affordable
Electric SUVs, once considered a luxury, are becoming more accessible. Tesla has reduced the price of the Model Y multiple times in 2023 and 2024, and competitors like the Ford Mustang Mach-E and Hyundai Ioniq 5 are following suit.
Federal and state EV tax credits also help lower the effective price. For example, the 2024 Chevrolet Equinox EV qualifies for a $7,500 federal tax credit, bringing its effective starting price below $30,000.
Should You Buy Now or Wait?
With prices trending downward, many buyers are wondering: is now the right time to buy?
Buy Now If You Need a Vehicle
If you need a car for daily commuting, family travel, or safety reasons, there’s no need to wait. Prices are already better than they’ve been in years, and inventory is strong. Plus, waiting too long could mean missing out on current incentives.
For example, many automakers are offering 0% APR financing on select SUV models through the end of 2024. These deals won’t last forever.
Wait If You Can Be Flexible
If you’re not in a rush, consider waiting until the end of the year. Dealers often offer the biggest discounts in Q4 to meet annual sales targets. Black Friday, end-of-year clearance events, and new model year transitions are prime times to negotiate.
Also, keep an eye on interest rates. If the Federal Reserve cuts rates in late 2024 or early 2025, auto loan rates could drop, making financing even more affordable.
How to Get the Best Deal on an SUV
Even with lower prices, it pays to be a smart shopper. Here’s how to maximize your savings.
Shop Around and Compare Prices
Don’t settle for the first offer. Use online tools like Edmunds, Kelley Blue Book, and TrueCar to compare prices at multiple dealerships. You’ll often find differences of $1,000 or more for the same vehicle.
Negotiate the Out-the-Door Price
Focus on the total out-the-door price, not just the monthly payment. Dealers may offer low monthly payments by extending the loan term, which increases the total cost. Know your budget and stick to it.
Take Advantage of Incentives
Look for manufacturer rebates, loyalty bonuses, and military or first-responder discounts. For example, Ford often offers $1,000 cash back for returning Ford owners, and Hyundai has student and recent graduate programs.
Consider Certified Pre-Owned (CPO)
CPO SUVs offer the best of both worlds: lower prices than new models, plus extended warranties and thorough inspections. A CPO Toyota RAV4, for instance, might cost $5,000 less than a new one but still come with a 7-year/100,000-mile warranty.
Time Your Purchase
Buy at the end of the month, quarter, or year when dealers are trying to hit sales goals. Also, shop on weekdays when dealerships are less busy and salespeople have more time to negotiate.
The Bottom Line: Yes, Car Prices Are Going Down
So, are car prices going down? The evidence is clear: after years of steep increases, prices—especially for SUVs—are finally moving in the right direction. Improved supply, cooling demand, and fierce competition are giving buyers more power than they’ve had in a long time.
While high interest rates and economic uncertainty remain challenges, the overall market is becoming more buyer-friendly. Whether you’re looking for a fuel-efficient compact SUV, a rugged off-roader, or a sleek electric model, now is a better time than the past few years to make a purchase.
Just remember: do your research, shop around, and don’t be afraid to negotiate. The best deals go to those who are informed and prepared.
Frequently Asked Questions
Are car prices going down in 2024?
Yes, car prices are gradually decreasing in 2024, especially for SUVs. Improved inventory, lower demand, and increased competition are driving the decline.
Will SUV prices keep dropping?
Prices may continue to soften slightly, but a sharp drop is unlikely. The market is stabilizing, so buyers should act when they find a good deal rather than wait indefinitely.
Is it better to buy a new or used SUV now?
Both markets are favorable. New SUVs have better tech and warranties, while used SUVs offer significant savings. Choose based on your budget and needs.
Do high interest rates cancel out lower car prices?
Not entirely, but they do reduce overall affordability. Shop for the best auto loan rates and consider making a larger down payment to lower monthly costs.
When is the best time to buy an SUV in 2024?
The best times are end-of-year sales, holiday promotions, and when new model years arrive. Dealers are most motivated to negotiate during these periods.
Are electric SUV prices coming down?
Yes, electric SUV prices are stabilizing or dropping due to increased production, competition, and government incentives. Models like the Tesla Model Y and Chevrolet Equinox EV are now more affordable.