Never thought I would open with this phrase – as we adjust travel plans for NADA due to snow storms in New Orleans – looking forward to seeing clients, friends, and associates to discuss all the questions and newsworthy issues facing our industry – especially after the country has gotten its first glimpse of President Trump’s agenda – talk about hitting the ground running. To be honest, there is an extra measure of excitement with the mood of the market being more upbeat.
How that translates to new car buyers’ enthusiasm remains to be seen, but there are positive points for engaging the customer: Cox Automotive, in their most recent numbers, shows manufacturer incentive spending as a percentage of the selling price at the highest point since 2021. The trend of increased incentives will need to continue in 2025, as a recent survey by Edmonds showed nearly half of all new car buyers will budget $35K or less on their next vehicle. When the average transaction price of a new car was $47,870 in mid-2024, our buyers needed a carrot, no doubt.
Another hurdle in the coming year will be the perception among many new car buyers of zero percent financing. A recent Edmonds survey revealed more than 33% of new car shoppers have a target financing rate between 0% and 3%. It was surprising to read that only 4% of all new cars financed last year were at zero percent financing.
There is no doubt this get-together will most likely have more questions than answers, and there are some interesting topics: the status of EV, the status of Honda and Nissan, the relationship between new leadership at Stellantis and current dealers, and maybe the hottest topic of all will be the full-on emergence of AI in the daily processes of the dealerships. It would be an oversight to ignore used car forecasts – the best guess is predicated on a continued shortage of used inventory and prices remaining in the $25,500 to $26,500 range.
I have a friend who is fond of saying, ‘It will be a cold day in hell!” before something unusual or unexpected happens. While the weekend weather forecast for NOLA is temperatures climbing to a balmy 64 degrees by Sunday, I anticipate that it will be a “Snowy Day on Bourbon Street” before we see another NADA with so much on the line. The winds of change are blowing, and just as the Crescent City experienced a record 10 inches of snow, keep an open mind and be ready, this new year is off to a crazy start.
Travel safe, and see you soon.