It's a bit of a seesaw in the car world these days. Used car prices continue a slow but steady downward trend, while new car transaction averages are headed to record highs.
Even though EVs still represent a minority of overall vehicle sales, they dominate industry news. So, we've included the latest on the models that buyers prefer to shop for and recent clarifications on the new EV tax credit structure.
Market At A Glance
It's a different week with the same story. CarGurus used car price index indicates the third consecutive price reduction on used vehicle inventory.
- California to ban sales of non-electric vehicles by 2035 - Washington Post
- GM begins initial retrofitting of vehicles sold without heated seats - Cars.com
- Reviews of 2023 Mazda CX-50 are lukewarm - Cars.com
- Over MSRP stickers cause backlash on Facebook - The Drive
- The noisy Dodge Charger Daytona SRT made waves - CarandDriver
- Outside the box tips for getting cars on your lot - CarfaxforDealers
- How to start retailing vehicles fully online - DealerInspire
- How dealers acquire inventory from service customers - Dale Pollak
Shoppers Love Tesla and Toyota EVs, But…
A new report from Kelley Blue Book looks at the most shopped models of electrified vehicles (meaning hybrid and all-electric) with some predictable and unexpected results. In the no news department, the Toyota RAV4 Hybrid was the most considered electrified vehicle. Completing the top three spots are the Honda CR-V Hybrid and Toyota Highlander Hybrid. It's also no surprise that the Tesla Model 3 (#4) is the most shopped all-electric vehicle.
Here's where things get interesting, as the next two spots are occupied by two pickups; the Ford F-150 Lightning (#5) and Ford Maverick (#6), which is a hybrid in standard form. Notably, the data doesn't reflect if there's any change in consumer behavior as a result of substantial modifications to federal EV tax credits. The reworked program knocked out numerous vehicles from qualifying due to new manufacturing locale requirements (there's not a single Toyota or Honda on the most recently released list from the Department of Energy).
The KBB report also highlighted that 27% of car shoppers considered an electrified vehicle, with 19% going the hybrid/PHEV route and 12% contemplating an all-electric ride. While total vehicle sales dropped by more than 20% last quarter, sales of electrified vehicles jumped to a record 443,000 units, a 13% increase.
IRS EV Tax Credit Updates
Just because Congress passed and the President signed off on the 725-page Inflation Reduction Act doesn't mean the details are carved in stone. Now comes the task of interpreting what the legislators intended, especially when it comes to the government's new approach to the EV tax credit program (plus, this helps justify the need for federal workers).
- Used EV Tax Credit: To qualify for a $4,000 or 30% credit (whichever is less), a used EV cannot be priced above $25,000. In addition, a qualified buyer must have a modified adjusted gross income below $75,000 ($150,000 for joint filers and $112,500 for heads of household).
- Battery Material Source: The new law requires that a vehicle's battery has at least 40% of critical materials sourced from North America by the start of 2024. This content requirement will rise to 100% by 2029.
- MSRP Determines Tax Credit Threshold: As mentioned before, there's a price cap of qualifying vehicles ($55,000 for passenger cars and $80,000 for light-duty trucks, SUVs, and vans). However, the MSRP determines this threshold, not the deal price.
- Post-Act Deliveries in 2022: Buyers who purchased and took delivery of a qualifying vehicle between August 16 and the end of 2022 must follow the previous tax credit scenario (the car must also meet final assembly requirements). That means new Tesla and GM EVs changing hands during this time won't qualify.
Forecast: August New Cars Sales Take Hit While Prices Rise
JD Power is out with its predictions for August's new car sales, and it's one of the could-be-better, could-be-worse reports. The auto analysis firm estimates that retail transactions will involve 980,400 units this month, a 2.6% decrease from August 2021 (after adjusting for one extra selling day this year). At the same time, the forecast calls for the average new vehicle transaction to hit $46,259 this month, a record-setting amount that tops the August 2021 figure by 11.5%.
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