If you’re thinking about buying a car, you might want to consider getting your shopping done now.
Car prices are under downward pressure as interest rates remain higher than expected, leading to higher loan costs for consumers, according to Autotrader editor-in-chief Brian Moody.
In response to this trend, manufacturers are offering incentives on certain models to attract buyers and stimulate sales. Incentives increased 59% year-over-year in July, according to Moody’s. Average incentives last month were 7% of the transaction price, up from 6.4% in June.
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Incentives are up year-over-year for most brands, with incentives for electric vehicles rising 73% above the industry average in July.
But Moody says it’s important to note that these incentives are selective and vary by model: Buyers are more likely to find them on less popular vehicles that dealers are trying to get off the shelves.
Luxury SUVs, compact SUVs, and minivans are unlikely to offer incentives due to their stable demand. In contrast, vehicles like the new Toyota Crown Sedan may come with attractive perks.
According to Moody’s, when consumers visit a car dealership, they might encounter a model with no incentives, but next to it a similar model might come with a $1,000 cash back and 0% financing for 60 months.
Dealers aren’t ubiquitous across all brands, “so it takes a little bit of extra research on the part of the consumer or shopper,” he said.
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That doesn’t mean there won’t be any specials coming up this holiday season: In fact, Moody’s says many dealers will want to get 2025 models on the shelves as close to the new year as possible, which means they’ll be offering specials on 2024 models.
Moody’s said the transactions “will take on unique characteristics based on current economic conditions.”
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He also warned that buying a car is a lot like buying a home, as the purchase price depends on interest rates.
Moody’s said lower interest rates would likely increase demand, which would in turn lead to higher auto prices.
