The Auto Industry in 2024: What the Heck Is Going On?

Car on an assembly line

After years of chaos and confusion, the automotive industry is finally showing signs of recovery in 2024. From empty dealer lots and outrageous markups to a resurgence in inventory and incentives, a lot has changed. If you're in the market for a new or used car—or just trying to make sense of where things stand—this article will break down the current state of the auto industry and what it means for you as a car buyer.

Remember the Chip Shortage?

Let’s rewind a bit. Do you remember when you’d walk onto a dealer lot and find… tumbleweeds? New car inventory was practically non-existent, and prices shot through the roof. Some dealers were asking $15,000 to $20,000 over MSRP. Yeah, fun times.

Thankfully, things have improved. The chip shortage that caused so much chaos is mostly behind us, and new vehicle inventory levels are coming back strong. But—and it’s a big “but”—the global supply chain remains delicate. We learned during the pandemic just how fragile it really is, and any hiccup (especially with China) could shake things up again.

Why Are Chips Still an Issue?

Most of the raw materials for semiconductors come from China, and we’re still dancing around trade tensions. While demand for electronics has softened a bit, the demand for automotive chips continues to rise. Today’s vehicles are packed with tech and driver safety systems that require higher-quality, more durable chips—chips that can’t just be pulled from a phone factory.

While automakers have gotten smarter about managing their supply chains, we’re still recovering from the production slowdowns of 2021 through 2023. In fact, sales projections for the auto industry have been set back nearly a decade. Where we expected to be in 2022, we likely won’t reach until 2030.

The Good News: Inventory Is Back-ish

Dealers are finally seeing hundreds of new cars on their lots again. That means—drumroll—deals are back, baby! We’re seeing below-invoice pricing and the return of incentives, which is something we haven’t enjoyed in four years.

Of course, not every model is easy to find. Inventory varies significantly by brand, model, and even trim level. But overall, it’s a breath of fresh air.

Two terms that help explain the state of the market:

• Inventory refers to all vehicles in a dealer’s pipeline—not just what’s on the lot, but also what’s coming off the production line or is in transit.

• Market Day Supply (MDS) is how long it would take a dealer to sell their entire inventory based on recent sales rates. It helps determine pricing and incentives.

Right now, that balance is finally starting to shift in the buyer’s favor.

Who Has What?

Not all brands are bouncing back at the same pace. Here’s a quick snapshot of which automakers have inventory—and which ones are still playing catch-up.

• American brands like Ford and Chevrolet generally have good inventory, especially for non-luxury models.

• Hyundai and Kia are also in great shape—even popular models like the Telluride and Palisade are easier to find.

• Toyota, however, is still struggling. Their main chip supplier, Renesas, had a major factory fire and earthquake-related damage. Add that to insane demand for their hybrids, and you’ve got long wait times for models like the Prius and Camry Hybrid.

• Subaru inventory is tight, but that’s by design. They’ve always managed production closely. The good news? Popular models like the new Forester are shifting to U.S. production, which should help shorten wait times.

  
  

What’s Going on with Used Cars?

Used car prices are finally starting to cool, thanks to the flood of new inventory. But if you’re selling a car, don’t expect to make a killing. And if you’re shopping for a certified pre-owned SUV, especially a big one, inventory is still tight.

We’re in a weird spot—many two- to three-year-old vehicles were never built because of the pandemic slowdown. So gently used, well-equipped cars are harder to find. Be cautious about ex-rental vehicles (especially those from Canada)—they’ve often lived a rough life.

Interest Rates: Still Lame, But Improving

Rates are hovering in the mid-5% to mid-6% range for new cars—even if you’ve got excellent credit. But there’s hope. The Fed has stopped raising rates, and cuts are expected by the end of the year.

That will make it easier for automakers to offer better financing deals. We’re already seeing special APRs in the 2.99% to 4.99% range on certain models.

What About Leasing?

Leasing is coming back after being practically dead during the pandemic. Money factors (leasing’s version of interest rates) are finally becoming more reasonable.

That said, leasing still isn’t what it used to be—unless you’re considering an EV or plug-in hybrid. Thanks to tax loopholes and incentives, there are some absurdly good lease deals on electrified models right now.

But don’t forget: leasing rules have changed. You likely can’t just trade your leased vehicle to any dealer anymore. Most manufacturers now require you to return it to a franchise dealer of the same brand, limiting your flexibility.

EV Sales: The Honeymoon is Over

EV sales aren’t crashing, but the meteoric rise has definitely slowed. The hype has worn off a bit as people experience the reality of living with an EV. Limited infrastructure (especially in the South), range concerns, and long charging times are dampening enthusiasm.

Want to hear what it’s really like living with an EV? Be sure to catch next week’s episode of The Straight Shift podcast, where I chat with one of my clients who waited two years for an EV—only to ditch it after 10 months. We’ll talk about what changed his mind and what it’s really like driving electric in a place that’s not exactly EV-friendly.

Bottom Line

The power is shifting back toward buyers. No, we’re not in a full-blown buyer’s market just yet, but we’re getting close. That means you should shop aggressively, be flexible, and take advantage of the growing deals—especially if you’re shopping for a new gas-powered vehicle.

And if your dealer doesn’t have the exact color or trim you want? Ask them to do a trade. Dealer-to-dealer trades are back too.

After a few brutal years, it’s nice to have some good news. We’re not completely out of the woods, but we’re definitely in better shape.

🎧 Want more insider info and real talk on car buying trends? Listen to this episode of The Straight Shift podcast.