Every year, the last Monday in May is Memorial Day in the United States. Experts say that consumers who are planning to buy a new car will receive good news over this year’s long weekend holiday: new car discounts are making a comeback.
During the pandemic, chip shortages and tight inventory led to a surge in prices for both new and used cars. However, as we entered 2024, the situation has changed. Data shows that the 2023 model year (2023MY) new car inventory held by American car dealers has nearly returned to pre-pandemic levels.
Multiple automotive shopping experts at Edmunds, the authoritative car trading website in the United States, have pointed out that there is currently an excess of 2023 model year new car inventory at dealerships across the country. As a result, new car sticker prices are on average several thousand dollars lower than the suggested retail price. On top of that, consumers can expect to find even more new car discounts around the upcoming Memorial Day holiday.
According to data from Edmunds in May, new cars produced in 2023 in the U.S. not only have abundant inventory but also come with larger discounts on the sticker price. Consumers purchasing a 2023 model year car right now can expect an average discount of $4,147, a discount level similar to pre-pandemic prices. In contrast, buying a 2024 model year car would only yield an average discount of $1,741.
Andrew, a sales manager at a popular Chinese community car dealership, mentioned, “Car manufacturers also run some promotions during the Memorial Day weekend, with some cars discounted by a few hundred or thousand dollars, depending on the model year and type of car.”
In addition to price, Edmunds experts also point out that consumers meeting the criteria who purchase a 2023 model year car are more likely to secure lower loan interest rates. For example, over a quarter of consumers who took out a loan to buy a 2023 model year car were able to get an average loan APR (annual percentage rate) of 1.99% or lower, while only 4.1% of consumers purchasing a 2024 model year car could access such low rates.
Andrew admitted, “The current interest rates for new car loans are indeed much higher than before the pandemic. Of course, there are some models with special rates, especially work vehicles or leftover models from the previous year (2023), which often come with very low special rates.”
“Sometimes you may see signs advertising rates as low as 1.99% or 2.49%, targeting specific models. Before buying a car, you can ask the salesperson which models have special rates or inquire about the lowest rate for the car you want to purchase,” he explained.
Among numerous car brands, Edmunds experts found that vehicles produced by Detroit-based manufacturers have accumulated the highest inventory, so dealerships may offer the biggest discounts on those brands during this long weekend holiday.
According to the latest data from Edmunds, the average discounts on 2023 models of Dodge, Chrysler, and Buick cars are $6,753, $6,252, and $4,256 respectively. In contrast, Japanese car brands Toyota, Subaru, and Honda have much lower average discounts at $1,337, $1,450, and $786 respectively.
Jessica Caldwell, Industry Analysis Director at Edmunds, stated, “In recent years, supply chain disruptions and limited inventory have lowered consumer expectations for buying cars during summer holidays. However, in this challenging automotive market, the inventory car discounts over the Memorial Day weekend are a significant highlight for consumers.”