What Lies Ahead for the Auto Industry in 2024

Dealers know better than most that life is full of surprises. Even so, we all like to make our best bets at the start of a new year. At the end of 2023, AIADA asked auto industry leaders to look into their crystal balls and give us their best guess at what 2024 has in store for consumers, dealers, and manufacturers.

“I think that despite all of the roadblocks that we’re facing going into next year, it’s going be another robust year for the auto industry as a whole. Consumer demand is still strong and hopefully we’ll continue to see easing of pricing pressure to help get new and used cars more affordable for our customers. On the EV side, I think as the market realities set in on how quickly (or slowly) consumers are willing to transition to an all-electric vehicle fleet, we hope to see a more rational approach by state and federal lawmakers on reducing emissions without unreasonable mandates. Unfortunately, with 2024 being an election year, only radical left or right- wing proposals from lawmakers seem to translate to votes, so we may have to wait for that rational moderate approach until after November.” - Mike DeSilva, 2023 AIADA Chairman

“The outlook for 2024 is uncertain, but we remain cautiously optimistic. Sales in both the new and used markets are facing strong headwinds from high vehicle prices and high interest rates. However, the need for personal transportation in the United States remains strong from our growing population and growing economy. We expect vehicle sales to continue their slow recovery in 2024 as inventories and discounting return to more normal levels, bringing more sales along for the ride.” - Charlie Chesbrough, Senior Economist and Senior Director of Industry Insights, Cox Automotive

“2024 is going to be a monumental year in auto retail as the financial realities and business consequences of government- mandated EV sales reverberate through the industry. I see auto retail approaching a tipping point in EV sales leading to meaningful business model changes. This will have major implications for franchise values, depending not only on the success of an OEM’s sales strategy, but also on location. With CARB states currently mandating 35 percent of OEM sales be zero emissions by 2026, OEMs will have a financial incentive to send the majority of their EV vehicles to those 11 states, resulting in greater disparities in EV and ICE availability from state to state. This disparity could lead to monumental differences in dealership profitability based on location, and ultimately greater gaps in franchise value, adding a new variable to blue-sky valuation.” - Erin Kerrigan, Founder & Managing Director, Kerrigan Advisors

“2024 is going to be an interesting year in the auto retail industry. New vehicle inventory levels will continue to grow with hopes that our manufacturer partners do not lose sight of the lessons that we learned during the pandemic about having strict supply guidelines — several partners have already lost sight of this lesson! Pre-owned vehicle prices will continue to moderate throughout 2024, which will be great for the industry and for the consumer. Fixed Operations is a huge opportunity for the industry as guests purchasing new cars ramp up returning to the dealerships to have their vehicles serviced vs. mom and pop service shops as vehicle complexity, pricing, and technology continue to drive this trend. Technology will play an even bigger role in all that we do, most importantly around pricing, traffic management, and cost controls. Given the government involvement in Electric Vehicles — which are more expensive and complicated to sell — we are in for a battle to maintain margin and profitability if the industry does not get a reprieve on how fast we are having to engage this new opportunity. The next few years will bring changes to our industry the likes we have not seen before, and digital retailing and the ease of our guest experience will determine success!” - Jeff Dyke, President, Sonic Automotive, Inc.

"I’ve been in the auto business for more than 25 years — and I’ve never worked during such an exciting time. Electrification. Automation. Connectivity. Changing ownership models. Cutting-edge vehicles pushing the boundaries of technology and design. We’re at the very beginning of a 50-year cycle of transformation. This is an industry that supports 10 million U.S. jobs, 5 percent of GDP and drives $1 trillion into the American economy each year. We are the country’s largest manufacturing sector. But we’ve got some major challenges in front of us. The auto industry and policymakers need a shared and realistic vision of success when it comes to these historic changes in powertrains and technologies. An approach that balances tensions between emissions reductions and maintaining our industrial base, our prosperity, and our global competitiveness.” - John Bozzella, President and CEO of Alliance for Automotive Innovation

"The auto industry will continue on its course back to normalization with inventory levels north of 60 days and decreasing gross profits. While electric vehicle sales are gaining momentum, full-scale consumer adoption remains a journey that spans years, not months. Therefore, OEMs will continue to pump the breaks on EV investments and refocus their efforts on hybrid and internal combustion engine vehicles. The direct-to-consumer sales model also still poses a threat.” - Jim Fitzpatrick, Co-Founder, CBT News

“Dealers tend to be optimistic people, and I see no reason to for them to be anything else in 2024. While international nameplate retailers do face challenges, particularly from our newly empowered regulatory agencies, they enter the New Year with unmatched products, unwavering work ethic, and a solid business foundation that has already survived the upheaval of the past few years. Since we are entering a sure-to-be contentious election year, dealers should plan to flex their advocacy muscles and ensure that their newly elected lawmakers understand and respect our industry.” - Cody Lusk, President & CEO, AIADA

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