Automotive industry trends for 2024 and beyond

When will the car supply chain recover?

When the COVID-19 pandemic hit the U.S. in March 2020, automotive production paused briefly but drastically. At least 93% of U.S. auto manufacturing shut down for several weeks, and car shoppers still feel the effects of that pause today.

From microchip shortages to a smaller automotive technician pool, the auto industry looks far different now than it did pre-pandemic. But what exactly are the major trends still affecting the industry? And what do those trends mean for car prices and availability in 2024?

Top auto trends for 2024–25

  • The automotive supply chain will likely never look like it did pre-pandemic, but inventory levels generally recovered in 2023 and are expected to continue doing so in 2024 and 2025.
  • Car prices remain elevated in 2024 due to inflation but are showing initial signs of decreasing as inventory stabilizes.
  • Car shoppers can expand their options to get better deals. Consider buying a used car instead of a new one, getting an EV instead of an ICE vehicle, or waiting longer for a deal to come up.

Automotive supply chain challenges and predictions

The pandemic-spurred manufacturing pause in 2020 not only drastically decreased vehicle production that year but also brought other festering supply chain challenges to a head. Early on, car makers realized that recovery wouldn't be as simple as making up for the lost production time. They've been fighting serious supply chain issues ever since.

With much of the auto industry still in flux, car shoppers are wondering if prices and inventory will continue to stabilize in 2024 and beyond. So we researched eight of the emerging challenges and spoke with industry experts to forecast how the supply chain issues will trend in 2024.

Challenge 1: Car production shutdowns

The auto industry initially shut down from March to May of 2020, to slow the spread of the coronavirus. According to a 2022 report by the U.S. International Trade Commission (USITC), this caused the lowest monthly vehicle production in the U.S. since 1945. Auto plants started reopening as soon as late April 2020, but U.S. production didn't ramp back up to 2019 levels until July.

As a result, the U.S. produced more than 2 million fewer vehicles in 2020 than in 2019, according to the Bureau of Transportation's summary of Wards Intelligence data. And domestic car sales decreased similarly. While car production numbers slightly increased in 2021, new challenges prevented a full recovery and led to nearly stagnant car sales that year.

Graph of US car production vs sales

Source: Wards Intelligence via Bureau of Transportation

With far fewer cars available, the industry started its shift to a seller's market. Car shoppers had to explore more options, wait longer, and pay more for a car.

Throughout 2022, there continued to be more buyers than cars, as noted by the National Automobile Dealers Association (NADA). And while 2023 saw more stable inventory, some level of unpredictability may remain for the foreseeable future.

Challenge 2: Semiconductor chip shortage

Auto plants fully reopened by July 2020, but car manufacturers soon experienced a shortage of some necessary components for modern vehicles: semiconductor chips. This shortage proved serious, to the point of causing another car production shutdown in 2021. But cars needed these microchips pre-pandemic — why were they suddenly in short supply?

Motor Trend explains that when auto manufacturers paused production in 2020, semiconductor chip manufacturers rerouted their business from cars to electronic devices. Chips for personal electronics were in particularly high demand at the time, and they were more lucrative to make and sell than chips for vehicles.

When car factories were ready to ramp back up in the summer of 2020, they quickly discovered chip manufacturers weren't available to produce the semiconductors their cars needed. And chip manufacturers had little incentive to shift production back to car microchips.

As sporadic COVID-19 shutdowns around the world exacerbated the semiconductor chip shortage throughout 2020 and 2021, many auto manufacturers used their limited microchips to produce only their most popular and profitable models. In other cases, they produced cars without certain chip-driven features, some with plans to retrofit them in when more semiconductors became available.

Graph of car features affected by microchip shortage

Car manufacturers' efforts to ration semiconductors meant long wait times for new vehicles, which led to fewer trade-ins and used cars on the market — and all-around higher vehicle prices. Despite their efforts to wait out the shortage, several automakers fully paused production in the summer and fall of 2021. The auto industry has had to be patient as more semiconductor chip factories launch domestically and globally.

While demand for personal electronic microchips slowed in March 2022, some chip manufacturers remained hesitant to reinvest in the auto industry. J.P. Morgan's report explains: "Automakers are increasingly requiring chips with higher computing power — especially as the industry transitions to electric and autonomous vehicles — which are fundamentally different to those used in PCs and smartphones."

It's been a slow recovery, but in December 2023, available new car inventory in the U.S. reached 71 days of supply, meaning there were enough cars to sell for 71 days before running out. The industry hadn't seen this many days of inventory since it took a downturn in the spring of 2021.

"Over the last several months, we've seen inventory levels creep steadily upwards, and that's good news for car shoppers who now have more selection and choice than they have had over the last several quarters," says Matt Jones of TrueCar.

Cox notes that 60 days' supply was considered normal pre-pandemic, though that standard will likely change as the new supply chain shakes out. Still, this milestone indicates the first near recovery of the supply chain.

Challenge 3: The EV revolution

As auto manufacturers restructured their fleets amidst ongoing supply chain issues, they also shifted toward electric vehicle (EV) production. So much so that EV supply stood at 114 days in November 2023, according to Cox, well above the overall new car supply average. And Cox's estimate doesn't include Rivian, Tesla, or other companies without a dealer body holding inventory.

Graph of US days of new car supply

Source: Cox Automotive

Electric cars require different microchips than standard vehicles, allowing automakers to potentially diversify their semiconductor needs while striving to meet the rising demand for EVs and take advantage of EV tax credits.

The EV revolution still faces plenty of challenges. But Deloitte projects that EV drivetrains, batteries, and fuel cells will grow 245% between 2022 and 2027, while ICE (internal combustion engine) drivetrains, fuel systems, and exhaust systems will experience significant declines. This means there should be plenty of EVs to meet the demand of U.S. shoppers in coming years.

Challenge 4: Russia-Ukraine war

Russia's invasion of Ukraine in early 2022 compounded the already serious microchip supply chain issues. While Europe's supply chain suffered more from the war, effects were felt worldwide as brands like Volkswagen, BMW, Mercedes-Benz, Honda, Toyota, Nissan, Land Rover, and Ford stopped exporting vehicles to Russia, according to KPMG.

Automakers in Eastern Europe and China previously depended on supplies from Russian and Ukrainian plants. And Automoblog cites Ukraine as being a major supplier of semiconductor raw materials like neon gas.

Since the war began, Ukrainian processing and exporting of raw materials has been limited. All this means chip manufacturers and automakers had to find new sources, putting even more strain on the global supply chain.

Challenge 5: Riskier driving behaviors

Data from the National Highway Traffic Safety Administration (NHTSA) shows that driving fatalities spiked drastically in 2020 and 2021, resulting in year-over-year increases seven quarters in a row.

The rise in severe accidents has placed further strain on the car market as drivers involved in accidents experienced higher car repair and replacement costs — industry trends that led to higher insurance rates.

According to NHTSA research into this trend, drivers who remained on the road during the early pandemic years may have engaged in riskier driving behaviors like driving faster on average, driving at extreme speeds, engaging in distracted driving, not wearing seatbelts, and driving under the influence.

The New York Times explored the roots of this phenomenon, citing studies and first-hand accounts. The causes are difficult to boil down, with theories ranging from a collective increase in anger and anxiety to feelings of freedom when hitting the road post-lockdown. It's also possible that aggressive driving is becoming more socially acceptable, despite road rage prevention being key to driving safety.

Experts still don't fully understand the increase in risky driving, but we do know that some of the behaviors stuck around longer than expected. For example, average speeds increased noticeably when drivers experienced less commuting traffic early in the pandemic, according to the Insurance Institute for Highway Safety and Highway Loss Data Institute (IIHS-HLDI). When traffic picked up again, drivers didn't slow back down.

Challenge 6: Shortage of automotive technicians

In 2021, TechForce Foundation estimated that demand for transportation technicians was outpacing supply by five to one, due to both an increase in demand and a decline in new technicians entering the industry.

This imbalance was magnified during the pandemic, due to more severe accidents and drastically fewer program entries and completions. While automotive completions first started decreasing in 2012, 2020 and 2021 saw serious drop-offs.

The resulting lack of auto technicians in recent years may have led to higher labor costs on top of higher part costs as repair shops competed for what little talent was available. Car owners who had an accident during this time faced higher car repair prices and wait times — and they were left with the expensive alternative of buying a used car during a vehicle shortage.

Graph of demand for auto diesel collision technicians

Source: TechForce Supply & Demand Reports

In December 2023, TechForce announced that transportation technician post-secondary completions increased for the first time in 10 years, with technician workforce growth outpacing overall labor force growth for the first time.

While there's still a gap to meet the industry's projected automotive technician need through 2027, 2023 and 2024 trends suggest that gap is narrowing. The collision repair sector has the greatest need at 6.7 jobs available for every graduate.

TechForce hopes to continue bridging skills gaps and inspiring a new generation of technicians through scholarships, work experience, and networking opportunities.

Challenge 7: Increase in stolen vehicles

While instances of car theft were relatively stagnant in the years leading up to the pandemic, they spiked in 2020 and remained elevated through 2023. The Council of Criminal Justice (CCJ) states that vehicle thefts rose 104.3% from the first half of 2019 to the first half of 2023.

The drastic spike in car thefts means more car shoppers are on the market as they replace their stolen vehicles, adding to the stress on limited vehicle supply.

CCJ cites the following factors that may have contributed to the car theft spike:

  • Social media trend: The current car theft spike coincides with a recent TikTok trend showing users how to steal cars — namely certain 2011–2021 Kia and Hyundai models that lack the anti-theft immobilizers most cars are sold with.
  • Organized crime: CCJ discussions noted that the social media trend may distract from emerging connections between organized crime and black-market motor vehicle thefts.

Motor Trend explains there are fixes available for some, but not all, of the Kia and Hyundai models lacking an immobilizer. But there have been reports of the software fixes not working. For now, Kia and Hyundai are continuing to roll out free fixes — car owners can find out if their vehicle is affected by contacting Kia or Hyundai.

Outside of Kia and Hyundai thefts, IIHS Senior Vice President of Communications Russ Rader noted in an interview with Progressive: "Traditionally, vehicles highly targeted [for theft] tend to be those with high horsepower, that go fast, and are luxurious." That tracks with IIHS-HLDI's list of most-stolen 2020-2022 vehicles, which includes the:

  • Dodge Charger and Challenger
  • Infiniti Q50
  • Land Rover Range Rover
  • BMW X6 and X7 4WD
  • Ford F-350 and 250 Supercrew 4WD

If you own a car on the most-stolen vehicles list, you might see higher insurance rates, especially if you have comprehensive auto coverage. That said, while your car's make and model may affect your insurance rate, it's just one of many car insurance cost factors.

Challenge 8: Autoworker strikes

With the United Auto Workers (UAW) union members on strike during the fall of 2023, experts speculated about the impact on car availability, sale prices, and shopping behaviors. Ultimately, Cox Automotive explains, "the UAW strike was narrow in scope and directly impacted only a handful of vehicles."

UAW consists of autoworkers at the Big Three U.S. auto companies: Ford, GM, and Stellantis (the parent company of Chrysler, Dodge, Jeep, and Ram), which The Nation notes makes up only about 15% of U.S. autoworkers. While the Big Three once controlled 80% of the U.S. market, its current share limited the strike's impact on the industry.

For some affected brands, certain model transaction prices rose due to the strike and decreased sales incentives. Other strike-affected brands increased their incentives and saw a transaction price decrease. Kelley Blue Book notes that some brands may have stock-piled popular truck inventory ahead of the strike. So no major inventory shortage surfaced as a result of the strike that ended in October 2023, and average car prices continued to fall.

So, will car prices go down in 2024 and 2025?

Considering all the trends affecting the automotive industry today, the prices of many models may remain relatively flat or begin to decrease in 2024 and 2025. As car makers continue to stockpile parts, inflation slows, and EV incentives grow, car prices should come down. In fact, they've already started to.

Higher-end car models are an exception, though. TrueCar's Matt Jones explains that much of today's price pressure comes from shoppers buying and creating more demand for luxury models, which in turn can raise overall transaction prices. This could be compounded by the fact that fewer low-cost vehicles are available, forcing some car shoppers to purchase more expensive models than they'd like.

But in general, even if you see average prices increase, that doesn't mean you can't get a deal on a mid- or lower-range vehicle. Especially if you can take some time to shop.

Used car price trends

As of early December 2023, the average used car was listed at $26,091, down about $1,000 from early December 2022, according to Cox. Price drops vary greatly by vehicle make and model, though. For instance, in the used wholesale market, compact car prices dropped 11.3% from November 2022 to November 2023, while pickups dropped only 4.6% — less than the overall average decrease of 5.8%.

New car price trends

While MSRPs continue to gradually increase, and will likely continue to do so, Cox notes that actual transaction prices for new cars declined 2.4% from December 2022 to December 2023, with the average new car costing $48,759. This indicates a shift toward a buyer's market, so new car buyers may expect more dealer incentives in 2024 and 2025.

Like with used cars, new car price changes can vary drastically between makes and models. As of December 2023, luxury vehicle prices were remaining more steady while non-luxury prices were increasing slightly.

How to think about buying a car in 2024 and 2025

With so many factors at play, you may need to rethink how you buy a car. Matt Jones says that while it's difficult to time the market, you can become familiar with the trends at play so you can take advantage of a good deal when you see one — which he says is likely to happen.

Tips for buying a car in 2024 and beyond

So, it may be time to up the effort you put into your car shopping process. If possible, plan your car purchase a few months in advance so you have more options.

  • Research used and new car prices for the models you're interested in so you can recognize a good deal when it comes up
  • Shop around for a car loan or lease so you can get the best interest rate
  • Stay informed on the trends mentioned in this article — particularly semiconductor chip production, effects of autoworkers strikes, and the shift toward EVs

Insuring your new car

Whether you buy a car in 2024, you can get a car insurance quote online or talk to an agent to learn about ways to customize your protection to your budget and preferences. Drivers countrywide who save when they switch to Progressive save nearly $750 on average.*

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