Sales growth is positive, but slowing

In April, sales growth remained positive on a year-over-year (YoY) basis for both new and used vehicles, up 5.3% and 5.1% respectively. However, the YoY growth rate decelerated compared to February and March levels, and month-over-month (MoM) sales dropped sharply to -7.8% and -8.5% respectively, suggesting that the spring sales season might be cooling early. Notably, the 30- and 45-day rolling averages for used sales leveled out in mid-April, making it unlikely that we will see a further acceleration in used sales demand.

One statistic we've been monitoring this spring is tax refunds, which also saw a deceleration this spring to a +2.7% YoY increase in average refunds through the week of April 26th, while they were up +6.1% YoY through the week of March 22nd. This drop in refunds could be another headwind for consumers looking to overcome vehicle prices and high-interest rates.

Used prices have flattened out

Despite strong sales this spring, average list prices (ALP) for used vehicles haven't risen as anticipated. Last year, even with a weak spring selling season, we saw the ALP for used vehicles increase 3.8% from December 2022 to April 2023. However, this year prices are actually down 0.5% from December 2023 to April 2024. This suggests that the force of price normalization is overcoming seasonal pricing trends.

This is a welcome shift for consumers. However, for dealers who were likely anticipating a spring pricing bump, it will create more pressure to move long-sitting vehicles, particularly if prices begin to decelerate. This could additionally portend further pricing uncertainty for the years ahead as the used vehicle industry navigates the aftershocks of reduced vehicle production, sales, and decreased leasing.

Cooling electric vehicle (EV) demand has prices declining

EVs continue to lead the way in vehicles seeing the largest price declines. For new vehicles, EVs made up eight of the top ten decliners. Similarly, for used vehicles, all ten of the models with the biggest price declines were EVs. The influx of 30,000 used EVs from fleet providers like Hertz in 2024 could lead to further price reductions for specific models.

It's important to note, though, that the price declines appear to be having a positive impact on some models. For example, the Tesla Model 3 had an ALP of $43,289 at the start of 2023 and spent 81 days on the market (DoM). By the end of April 2024, the ALP had dropped to $26,396, a decrease of 39%. Correspondingly, the DoM fell to under 49 days, representing a drop of 38.6%. By comparison, for overall used vehicles, the ALP declined just 3.6% and DoM declined 13.3% over the same period. This suggests that the price declines are stimulating interest in select used EV models.

Other key trends:

• DoM has been declining for used vehicles. It appears that the movement of long-sitting vehicles and fresh inventory coming onto lots has helped to lower the average days to under 75, down 3.9% MoM and down 0.6% YoY.
• It looks like EV prices might have reached some stability as both new and used ALP for EVs ticked positive MoM in April, the first positive shift in six months for the used segment.
• When it comes to fast moving green vehicles, GM has some of the fastest-moving new EVs while Toyota and Honda lead on hybrids.