The amount consumers are paying for new cars, trucks and utility vehicles continues to decline, falling 2.6% in January to $47,401.
The average price paid for a new vehicle dropped last month, which is good news for car buyers.
As automakers rebuild their dealer inventory of new vehicles, the average transaction price paid for those cars continues to fall. Not only did prices dip between last month and December, but a comparison of January 2023 and last month shows a 3.5% drop.
The December-to-January decline is normal, but the year-over-year drop is uncommon. Cox Automotive analysts pointed to automakers offering bigger discounts to move metal sitting on dealer lots.
“It is common to see lower transaction prices and sales in January, as December typically is a hot month for luxury vehicle sales,” said Erin Keating, executive analyst for Cox Automotive.
“However, the year-over-year new-vehicle ATP decline of 3.5% is notable. Prices have been trending downward for roughly six months now as automakers are sweetening deals to keep the sales flowing.”
Shoppers saw discounts and incentives in January, an average of 5.7% of ATP, up from 5.5% in December. However, the year-over-year jump was massive: nearly 100%, Cox noted.
In January 2023, when new-vehicle inventory was lower by roughly three-quarters of a million units, incentive packages averaged just 2.8% of the average paid.
Do I have a coupon?
Luxury vehicles and full-size pickup trucks had some of the highest discounts in January, while small pickups, full-size SUVs and minivans averaged less than 3% of ATP. The ATP for luxe models last month was $60,978 compared with $62,834 in December. It was the lowest average transaction price for the segment since the summer of 2021.
In January, luxury prices fell 9.7% year over year with luxury compact SUVs suffering price declines of 11.9% compared to January 2023. Sales incentives for luxury vehicles averaged 6.2% of ATP in January, down slightly from December but higher by 123% compared to January 2023.
In January 2024, luxury brands accounted for 19.8% of industry sales, down from 20.6% in December, a month that typically sees strong luxury sales.
Meltdown in the middle
Prices for non-luxury brand vehicles also decreased month over month in January. At $44,052, non-luxury vehicle prices were lower in January 2024 by 2.1% year over year. Incentives for non-luxury vehicles averaged 5.5%, an increase from December.
In comparison, one year ago, non-luxury incentives averaged 2.9% of ATP in January 2023. Inventory levels have been increasing for the past year, shifting the market to favor buyers who are enjoying more choices, more discounts and lower prices.
Trickle charge
Even electric vehicles experienced price drops as EV makers cut prices to keep up with whether or not their vehicles qualified for federal tax credits or, in the case of Tesla and Elon Musk, if chasing sales at the end of the year.
According to Cox Automotive’s revised analysis, the average price paid for a new electric vehicle in January 2024 was $55,353. Year-over-year, EV prices have tumbled 10.8%, according to the most recent analysis. January 2024 EV prices were higher month over month by 3.2%, as EV ATPs in December 2023 averaged $53,611, the lowest point in the past 12 months.
“First and foremost, the overall narrative is unchanged – EV prices have come down significantly in the U.S. in the past year, led by price cuts at Tesla,” said Mark Strand, senior director of Business Intelligence at Cox Automotive.
“Our newly revised EV pricing data more accurately reflects the real-world pricing of electric vehicles in the U.S. With new EVs launching into the market seemingly every month, our pricing models have to be continually updated and revised to capture a clear picture of the market.”
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