Executive Summary

• The average new-vehicle retail transaction price in January is expected to reach $45,106, down $1,636 from January 2023. The previous high for any month – $47,329 – was set in December 2022.
• Average incentive spending per unit in January is expected to reach $2,346, up from $1,346 in January 2023. Spending as a percentage of the average MSRP is expected to increase to 4.8%, up 2.0 percentage points from January 2023.
• Average incentive spending per unit on trucks/SUVs in January is expected to be $2,546, up $1,186 from a year ago, while the average spending on cars is expected to be $1,727, up $434 from a year ago.
• Retail buyers are on pace to spend $37.0 billion on new vehicles, down $0.7 billion from January 2023.
• Trucks/SUVs are on pace to account for 79% of new-vehicle retail sales in January.
• Fleet sales are expected to total 225,468 units in January, flat from January 2023 on a selling day adjusted basis. Fleet volume is expected to account for 20.7% of total light-vehicle sales, up 0.3 ppts from a year ago.
• Average interest rates for new-vehicle loans are expected to increase to 7.1%, 34 basis points higher than a year ago.

EV Forecast

“The first three weeks of 2024 have started slowly for EV retail share, dropping to 8.1% from a high of 9.2% at the end of 2023. There was a similar dip in January 2023 when new rules for the IRA incentive kicked in specifying income and price limits for EV eligibility. Now, the rules have changed again regarding battery component manufacturing or assembly. Furthermore, the credit is disallowed if any of a vehicle’s battery components were manufactured or assembled by a Foreign Entity of Concern. The result is that several popular EVs have lost the purchase credit,” said Elizabeth Krear, vice president, electric vehicle practice at J.D. Power

“For those vehicles and buyers that still qualify, the credit can now be used as a down payment at the point of sale instead of waiting until filing tax returns—and all EVs still qualify for the tax incentive on a lease transaction. Several manufacturers have announced plans to bring their vehicles back into the fold in the coming months by adjusting their supply chains. In the interim, we expect to see more incentives and leasing to bridge the gap,” Krear said. J.D. Power has adjusted its 2024 forecast of EV retail share by a half a percentage point to reach an average of 12.4% in 2024, or a 4% EV market growth in 2024.