The average transaction price for a new vehicle jumped nearly $700 to $48,724 last month compared to November 2023. Some might point to higher interest rates or bigger numbers on the window sticker, but there’s a better reason.
Americans bought more luxury vehicles in November, driving up the average transaction price on a year-over-year basis.
In fact, average transaction prices, or ATPs, were up $720 compared to October. The numbers rose despite efforts by automakers to keep Americans rolling into dealerships as new model-year vehicles began taking spots on dealer lots.
“Higher prices were met with higher discounts in November, which has kept the retail business moving,” said Cox Automotive Executive Analyst Erin Keating. “Following the national election, pent-up demand and some improvements in consumer confidence seem to be driving the market. And higher incentives are certainly helping as well.”
So why did they go up? Americans bought nicer vehicles than usual. The end of the year features a rush on luxury vehicles. Automakers offer plenty of discounts looking to entice buyers to put big red bows on new vehicles and park them on the driveway for Christmas morning.
More discounts
Automakers actually offered more incentives in November than in the previous month. They accounted for 8% of the ATP, according to Cox. In October, it was 7.8%, and for the year-ago period, it was just 5.3%.
Incentives last month were higher by more than 50% year over year (approximately $1,300), while vehicle prices increased by only 1.5% (approximately $700), helping improve affordability and likely boosting vehicle sales — and that’s likely to continue.
“The end of the year typically sees an increase in transaction prices, as luxury sales pick up as the year winds down,” added Keating. “If sales volumes in November are any indication, we think 2024 will end on a positive note for the auto business. Yes, prices are trending higher year over year, but higher incentives and discounts are bringing in buyers.”
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Not everyone or every segment
Automakers are offering more incentives to lure more buyers in at the end of the year.
Although incentive levels are very high right now, that’s not an across-the-board measure. So don’t hop into your old car thinking every vehicle brand is offering big money for you to help you into a new car, truck or SUV.
It doesn’t take much to figure out what companies are offering big incentives — just look for the slow-sellers. Cox noted that 11 of the 20 brands it follows spent more to move metal: incentives comprised at least 10% of the average transaction price. There aren’t any surprises on the list, which includes Volkswagen, Ram, Audi and Nissan, among others. Part of the reason is the types of vehicles these companies sell. Luxury cars, full-size pickups and compact SUVs featured the highest level of incentives.
The Compact SUVs segment, which accounts for nearly 1-in-5 new-vehicle sales in the U.S. market, continues to be the most popular and competitive segment in the U.S. market. The ATP for the segment was $36,858, which is cheaper than the overall average, but 1% higher than a year ago.
Last month, incentive spending in the Compact SUV segment was 10.2% of ATP, a jump from 9.4% in October and an indication of the competitiveness of the popular Compact SUV segment. Only the High-End Luxury Cars segment (BMW 7-Series, Mercedes S-Class, Lexus LS, etc.) had higher incentives, at 11.6% of ATP.
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