For many looking to purchase a robust pickup, navigating the market can feel like a daunting task. High prices and fluctuating interest rates have made potential truck buyers hesitant. However, industry experts suggest that 2024 could present a prime opportunity to finally get behind the wheel of a new truck.
“2024 is shaping up to be the most favorable year for buying a new vehicle, including trucks, since the onset of the pandemic,” states Mark Schirmer, an industry insights director at Cox Automotive. He points out the stark contrast to the market conditions of 2021 and 2022, emphasizing, “Dealers are actively offering discounts again – a scenario virtually unheard of just a year and a half ago. Dealership lots are well-stocked, offering buyers a wider array of choices.”
The supply chain disruptions that plagued the automotive industry are largely resolved, leading to increased vehicle availability. This shift is empowering consumers, translating to improved satisfaction during the truck buying process.
While interest rates remain elevated compared to pre-pandemic levels – averaging around 9.2% APY in December – they have receded from their peak last fall, according to Schirmer. Before the pandemic, rates for new vehicle financing typically hovered between 4% and 5%.
“As interest rates gradually decrease and dealerships become more generous with discounts, we anticipate many buyers who previously stepped back from the market will re-engage,” Schirmer explains. “The current market dynamics are indicative of a return to more normalized conditions.”
It’s worth noting that premium, high-demand truck models might not see significant price reductions immediately. However, brands like Ford, General Motors, and Stellantis, which currently have higher inventory levels, are more likely to offer attractive deals to move trucks off their lots, Schirmer suggests.
Cadillac dealership with trucks for sale, representing increased truck inventory and better buying opportunities in 2024.
In this Jan. 31, 2023, file photo, Cadillac vehicles are offered for sale at a dealership in Lincolnwood, Illinois.
Ford’s CFO, John Lawler, hinted at this strategy back in November, indicating that the automaker was closely monitoring market prices and prepared to introduce substantial incentives to attract buyers.
Will Zero Percent Financing Make a Comeback for Trucks?
The question on many buyers’ minds is whether the enticing 0% financing offers of the past will reappear. Nishit Madlani, a managing director at S&P Global Ratings, suggests “never say never,” while predicting a rise in overall incentives by 2025. “The increasing vehicle inventory has undeniably shifted the balance of power, creating a buyer’s market,” he affirms.
Madlani attributes the previously inflated vehicle prices partly to robust fleet sales and the enduring American preference for larger vehicles, particularly trucks and SUVs.
“Trucks now constitute approximately 80% of the market, with sedans making up the remaining 20%… consumers are clearly willing to invest more for larger vehicle types,” he observes. “The resilience of auto sales, especially in the truck segment, has been notable.”
Jeep dealership showcasing various truck models, highlighting the improved selection for truck buyers in the current market.
In this March 7, 2021, file photo, a car dealership displays vehicles on the lot in Lansing, Kansas.
Jessica Caldwell, head of insights for Edmunds, points out that buyer expectations for vehicle features and amenities are also contributing to higher average prices. The average transaction price for a new vehicle reached nearly $49,000 in December, according to Edmunds data.
Furthermore, trucks equipped with hybrid powertrains or powerful V8 engines are experiencing strong consumer interest, often selling at or above their manufacturer’s suggested retail price (MSRP).
Caldwell notes that while overall pricing pressures are easing, affordability remains a concern for many. “We are observing price softening… but strong demand persists in the more affordable segments of the market, aligning with what many buyers can realistically manage,” she states.
While lower interest rates are available, they are often tied to shorter loan terms, typically under four years. “Many people find it challenging to commit to a 48-month repayment period for a vehicle,” Caldwell adds, highlighting the fact that cash purchases remain uncommon in the auto market.
Madlani, while optimistic about new vehicle sales, cautions that economic downturns and persistently high interest rates could increase the risk of auto loan delinquencies, particularly among younger demographics. “We are already seeing an uptick in loan defaults among younger buyers,” he reveals.
Electric Trucks: A Potential Area for Savings
For truck buyers open to electric vehicles, the current market presents particularly compelling opportunities. The electric vehicle sector is experiencing a surge in new models and a slightly slower adoption rate compared to traditional vehicles. This combination has led to more significant incentives on EVs, with potential savings reaching up to 9% off the vehicle price, according to Cox Automotive data.
“The EV market is intensely competitive, and we anticipate continued and significant pricing pressure across all manufacturers,” Madlani predicts.
Caldwell concurs, adding, “A considerable portion of the American buying public is still not fully convinced about transitioning to electric vehicles. To encourage broader adoption, further price reductions on EVs, including electric trucks, may be necessary.”
In conclusion, for those considering a new truck purchase, 2024 appears to be a year brimming with opportunity. Increased inventory, the return of discounts, and the emergence of a buyer’s market create a favorable landscape. While interest rates remain a factor, the overall conditions suggest that now could indeed be the Best Time To Buy A Truck and secure a deal that was less attainable just a short time ago.
