How Will Your Car Costs Change in 2024?

As the auto industry continues to react to numerous economic changes, new-car buyers may want to get a feel for 2024's trends.

Aidan Keefer | 

Apr 24, 2024 | 4 min read

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As the U.S. economy continues to recover from the slower growth of 2022 and 2023, car buyers could see sticker prices come down in 2024. But, while those manufacturer-suggested retail prices might be easier to swallow, borrowers are likely to continue seeing high loan rates for both new and used vehicles in the new year.

Auto Trends Affecting Car Prices in 2024

For 2024, the consumer outlook for the auto industry appears largely optimistic, though a few setbacks could give car buyers pause.

Inflation is finally showing signs of tapering off after months of price jumps, with the U.S. Bureau of Labor Statistics (BLS) in January reporting that many consumer price indexes held steady in the final months of 2023. Buyers are starting to see better prices across the board, including in the auto industry. Data from Kelley Blue Book and Cox Automotive shows a $360, or 0.7%, decrease in the average price of a new car between September 2022 and 2023.

Additionally, data from Edmunds shows prices on previously owned vehicles are also expected to decrease. As the United States continues to resolve supply chain issues, the demand and prices for used cars, which have risen due to issues including a shortage of new cars, might decrease — as long as wider positive economic trends continue.

Manufacturers are also adjusting to the economic demand for "smart" vehicles, which are advanced vehicles that use microprocessors to help with navigation, cruise control, and other automated features. While these sophisticated systems require more elaborate parts to run effectively, some economists are optimistic about widespread investment in domestic manufacturing of smart-car parts that could increase the U.S. market share of memory chip production from 2% to 10% over the next decade. This may create less reliance on international supply chains, which could mean more affordable cars for consumers in the near future.

Auto Trends Affecting Car-Ownership Costs in 2024

On top of these potential drops in car-purchasing costs, consumer dollars could go further when making financial decisions at the pump as well. Year-over-year average gas prices dropped 5.6% between October 2022 and 2023, according to the Bureau of Labor Statistics. For reference, the average driver traveled 11,121 miles in 2021 (according to the U.S. Energy Information Association), with average gas prices that same year topping out at $3.48 (according to the Bureau of Labor Statistics). Considering an average fuel economy of 25 mpg, according to EPA data from 2021, that would mean yearly gas expenditures for the average individual equaled $1,548.04. A 5.6% reduction in that cost would bring the total to $1,461.35 for a savings of $86.69. Gas prices have seen much volatility in the past few years, caused by many economic and foreign policy issues. While the data showed a decrease over the past year, that trend may or may not continue.

However, these savings may be offset by a sharp rise in vehicle insurance costs, which have increased 19.2% during the same timeframe. For context, if someone paid $2,000 in October 2022 for their annual insurance premium, the 19.2% jump would push that payment to $2,384 in October 2023.

Auto Loan Rate Forecast for 2024

Despite overall car prices seeming more within reach for the average consumer in 2024, loan rates for borrowers may not become any more affordable. Loan rates currently sit at a nearly 20-year high, according to a recent report from Edmunds.

Loan rates have trended consistently higher since September 2021 — a change of more than 3% that mostly impacts low-credit borrowers. But some good news could be on the horizon, as the Federal Reserve suggests a possible interest rate cut to 2% could come as soon as the spring if inflation continues to trend downward. While Fed rates don’t directly impact auto loan rates, changes to the rates often have a trickle down effect, leading to lower loan rate offerings by lenders.

Therefore, if the Fed's prediction holds true...relief over the next six months. You can monitor the Fed rates and reach out to your preferred lenders to confirm any resulting impacts to loan interest rates. While industry forecasts for 2024 seem optimistic compared to the past few years of volatility, time will tell which of these trends plays out to decrease or increase car costs.

Aidan Keefer

Aidan Keefer is a writer and strategist focused on finance and insurance for the consumer and commercial markets, especially as those topics pertain to the automotive industry. Currently based in New York City, Aidan grew up in New Jersey — where he's navigated some of the most aggressive, unforgiving roads on the East Coast. Outside of writing about finance and insurance trends, Aidan can be found watching old movies or checking out the latest brewery opening.