Car Shoppers Resilient Despite High Interest Rates

Interest rates have tripled compared to last April. Yes, you read that right. Car loan interest rates are now near 7%, up from the low twos in 2022 making cars less affordable and causing pain for many car shoppers. However, sales were strong in April — up by nearly 6% according to some estimates — and in our latest Ease of Purchase survey 83% of buyers found the process easy, up from 81% in March.

The slight uptick follows two factors that also saw positive change in April.

First, as inventories rise for many automakers (up 45% overall from April 2022*) the number of shoppers that said they found the car they wanted in stock rose to 47% in April from 43% in March. And while fewer purchased in transit vehicles (24% in April down from 30% in March) a healthy 22% were fine with ordering from the factory up from 18% in March.

What shoppers weren’t doing was choosing an alternate vehicle that was in stock. Only 6% chose that option in April down from 9% in March and the lowest we’ve tracked since our survey began in July 2022. That means trying to move a potential buyer up to a more expensive model on the lot may be less likely as they are more willing to wait for what they want either from the factory or in transit. One shopper mentioned the dealer located the car they wanted in a nearby state and having it transported to meet their needs.

More car shoppers in April also said it took less time than they expected to complete their purchase, up from 13% in March to 19% in April. This is the second factor we generally see influence a higher overall Ease of Purchase score. It was also positive to see the number of buyers who said it took more time than expected to fall with those saying it was what they expected remain relatively the same.

A number of comments from April’s survey stressed that the process worked best when they had locked in the specific vehicle they wanted early on in the process and moved forward from there. Scores around agreeing to a final price and value of the trade-in remained similar to past months as well.

Other shoppers were surprised at the relative lack of paperwork they had to do to complete the purchase while others were happy with how much they could do online before taking delivery.

The Ease of Purchase Scorecard is a monthly gauge of over 400 new car shoppers conducted by the CDK Global research team.

*J.D. Power Data