To help you understand what is going on in the economy and beyond, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You’ll get all the latest news first by subscribing, but we publish many (but not all) of our forecasts a few days afterward online. Here’s the latest…The car market is getting back to normal. Slowly. Sales are rebounding. Inventories are no longer abnormally scant. Financial incentives, which dried up during the pandemic, are reemerging. Still, it’s a tough environment for buyers. Here’s what to know if you might be in the market.1. Sales and costsTotal sales should grow a bit this year: Figure on about 16.3 million, up slightly from 2024’s already-solid 15.9 million vehicles sold. Interest rates on car loans should decline, albeit only slightly, after the Federal Reserve’s cuts last year and a bit more Fed easing later this year. Slightly lower financing costs also bode well for sales.Subscribe to Kiplinger’s Personal FinanceBe a smarter, better informed investor.
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Sign up for Kiplinger’s Free E-NewslettersProfit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more – straight to your e-mail.Profit and prosper with the best of expert advice – straight to your e-mail.2. InventoriesBuyers can expect a bit more selection as dealer inventories rebound — also good for sales. Among the most popular categories of cars this year, according to Joseph Yoon, consumer insights analyst at Edmunds.com:Big and compact SUVs. Roomy three-rows and, on the other end of the spectrum, small ones. Families with kids are often looking to upsize. Retirees and empty nesters often want to downsize.Pickup trucks of all flavors. Nothing new, considering how dominant trucks once meant for work have become in recent years.And hybrids, which had a banner year in 2024 and figure to stay in demand. “Consumers have made it pretty clear” that they’re interested in electrification, but not necessarily pure electric vehicles, notes Yoon. Hybrids like Toyota’s RAV4 and Honda’s CR-V are thriving as buyers look to save gas but not abandon it. More hybrid versions of popular models are rolling out, particularly from Toyota — hybrid Tacomas, Tundras, 4Runners, etc.If you’re looking to score a big discount, EVs are the place to shop, Yoon says, provided that you are open to going electric. Between federal and state tax credits and discounts from manufacturers, there are juicy deals to be had. Note that any talk of doing away with the $7,500 tax credit on certain EV models could spur a huge wave of buying.Brands with the most inventory in stock now, according to data from Cox Automotive, which could help buyers: Ford, Tesla and Stellantis-owned ones like Ram and Jeep. By contrast, inventories are tight at Toyota, Lexus, Honda and BMW, with scant room to haggle.3. Buyi
