New Vehicle Sales Strong Even as Prices Approach Record Highs

Automakers converted new-vehicle shoppers to actual buyers at a strong rate during the final quarter of the year. This happened despite four straight months of price increases, and now consumers are looking at near-record prices.

By the end of the year, the average transaction price for new vehicles reached $49,740. That is a 1.5% increase over November ($48,724) and close to the all-time number — $49,958 — from December 2022. New vehicle sales for December as well as the entire year were up.

“It was a December to remember, in terms of both sales volumes and prices,” said Cox Automotive Executive Analyst Erin Keating. “As we reported just after the election, consumer sentiment and confidence have been on the rise.

“Vehicles, especially luxury vehicles, are typically an emotional purchase, and when consumers are optimistic, they go shopping. Rates dipped for a short bit late in 2024, discounts were higher, and the glass was half full. No wonder we saw the lift in both prices and volume.”

New-vehicle sales in 2024 finished near 16 million, according to estimates from Cox Automotive’s Kelley Blue Book, an increase of just over 2% from 2023 and the best year for volume since the pandemic.

Big sales, big money

Typically when sales are strong, pricing remains below record levels, but the current numbers are the result of a perfect mix of factors. Luxury vehicle sales typically are very strong in December — people love big, showy gifts and they don’t get much bigger than a big red ribbon atop a luxury SUV.

Those high-end vehicles typically sell for prices exceeding $80,000, according to Cox, which noted that approximately 4.4% of total industry sales in a given month, or roughly 60,000 units, are for deals priced above $80,000.

Last month, Kelley Blue Book estimates that approximately 84,000 vehicles — or 5.6% of total sales — transacted at prices higher than $80,000, the highest volume ever. The big named in the price range include the Land Rover Range Rover, Cadillac Escalade, BMX X7, GMC Yukon and Tesla Cybertruck.

More Sales News

• Car Buyers at Risk as Trump Prepares to Roll Back Consumer Protections
• Some Big Surprises as Consumer Reports Hands Out Annual Auto Report Cards
• Consumers Growing More Confident About Self-Driving Vehicles

Not just luxury

While luxury nameplates with big sticker prices did help to drive the average transaction price up last month, they weren’t the only pricey vehicles selling well. Full-size trucks enjoy ATPs well over the average, at $64,261, and volume was 223,293 units, according to Kelley Blue Book estimates, the highest point in 2024.

Also, electric vehicle sales jumped 15.2% last month as buyers decided to take advantage of the $7,500 federal tax credit before the incoming Trump administration eliminates or reduces them after Jan. 20.

The ATP on EVs in December? $55,544. The number is a 1.1% jump from November. Incentives for EVs remained elevated in December, although they were lower month over month at 14.3% of ATP, down from 14.7% in November, Cox noted.

EV incentives were higher by 41% year over year and have been above 12% of ATP for six straight months. Strong sales incentives, which averaged more than $6,700 per sale in 2024.

Givebacks

Automakers are still offering buyers plenty of incentives to head to their local dealers. Incentives accounted for about 8% of the average transaction price, or about $3,958, last month. That was significantly higher than the year-ago period, which was about 5.5% of the ATP.

However, the 8% is basically unchanged from November. However, automakers know where to drop the biggest lures: luxury vehicles. Incentives accounted for 10% of entry-level luxury vehicles last month while luxury compact SUVs were also well over the average at 9.4%.

Volkswagen, Ram and Nissan offered the largest incentives among volume automakers, with all of them being above 13% of ATP. Toyota, Land Rover and Porsche incentives were among the lowest in the industry, Cox reported.