NJ auto market ‘getting better’ for buyers, still far from ideal
🚗 Inventory levels are making a comeback for many vehicle brands
🚗 There's not much wiggle room from the sticker price
🚗 Another supply crunch is expected as NJ sharpens its focus on electric vehicles
It's still far from a buyer's market when you're looking to purchase a new or used vehicle in New Jersey.
Lot inventories are at stronger levels than where they were at last year and in 2021, but the industry remains stuck in a cycle that never bodes well for consumers.
The understanding is that vehicle prices will drop gradually as time goes on. Industry observers, though, are keeping their eye on an influx of electric vehicles into the market, and how that will impact the prices of traditional cars down the line.
"The good news is that things are getting better. The bad news is, they're nowhere as good as consumers and the dealers would like to see them," said Jim Appleton, president of the New Jersey Coalition of Automotive Retailers.
Supply chain issues disrupted the new car market during the height of COVID, which, in turn, meant fewer trade-ins of used vehicles because fewer people could afford to purchase a new one. That led to fewer used cars on the market as well, and buyers of both new and used vehicles have been facing a rough supply and demand scenario.
"Prices this time last year in the used car market were astronomical," Appleton said. "They've come back down, not quite to Earth."
According to an analysis by iSeeCars, used cars priced under $20,000 are vanishing nationwide. The average used car price has increased by nearly 50% since the coronavirus emergency took hold of the nation in 2020.
Are car prices coming down?
A buyer's opportunity to negotiate down from a car's sticker price is pretty slim if they're looking at a vehicle that's in demand, Appleton said. There's some wiggle room if the vehicle in question is one that's been on the lot for months.
Three years ago, vehicles were hanging around lots for an average of 90 to 120 days. Today, in some cases, the average is less than a month.
Appleton said consumers may be able to avoid paying top dollar by "shopping around" — there are dealers who will undercut their competition's prices, at a moment's notice. And if buyers are willing to take a car that's not the color they prefer or packed with their favorite features, they may be able to save some money, he said.
New car prices have been falling in 2023, and they're expected to get back to a point that offers the buyer a little more leverage.
But at the same time, regulation related to electric vehicles could work against those price breaks. A push in New Jersey for more zero-emission vehicles on the road is expected to create another supply crunch.
In July, Gov. Phil Murphy announced plans to make a rule that will force vehicle manufacturers to ramp up their electric vehicle output over time, until EVs account for 100% of their sales to dealers by 2035.
While the rule, which should be published this month, does not impose any obligations on car dealerships, experts note that the change will obviously reduce the number of fuel-powered cars hitting the market.