New Car Prices Drop Year-Over-Year For First Time In A Decade | Carscoops
S E E D E D C O N T E N T
Incentives on luxury vehicles and EVs are pushing down costs for consumers for the first time in a decade.
December 16, 2023 at 10:04
by Sebastien Bell
The months of September, October, and November 2023 were the only three months in the last decade when new vehicle prices shrank year-over-year, instead of growing. This contraction was due to dealers offering larger incentives than they have since the pandemic caused vehicle values to soar.
In November, the average transaction price (ATP) for a new vehicle was $48,247. While that was less than 1 percent higher than October's ATP, it was 1.5 percent down as compared to November 2022.
That's attributed to dealers offering buyers more incentives due to the normalization of supply, according to new data from Cox Automotive. While manufacturers' suggested retail prices (MSRPs) increased by an average of around 1 percent from 2022 to 2023, sales incentives amounted to 5.2 percent of a vehicle's ATP, the highest level since 2021.
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Read:BMWs Are The Fastest-Selling New And Used Cars In America
Credit: Cox Automotive
Put another way, the data shows that the size of incentives has more than doubled over the last year. And while that may be good news for buyers looking for a new vehicle, Rebecca Rydzewski, research manager at Cox Automotive, says that dealers aren't as thrilled.
"While consumers may feel some relief in vehicle prices and incentives as we close out 2023, automakers and dealers are feeling the results of the downward price pressure," said Rydzewski. "The latest dealer sentiment survey by Cox Automotive clearly indicates that dealers are seeing profits contract as inventory levels return to normal, and incentives are turned up to help stimulate sales."
The ATP for the average consumer was just 98.3 percent of MSRP in November 2023, the lowest level since April 2021. However, the situation remains better for buyers looking for a premium vehicle than those looking for an affordable one.
Luxury car prices drop 7.5%
The prices of new luxury vehicles fell by 7.5 percent last month, as compared to November 2022. Incentives in the market averaged 5.8 percent of the ATP, which helped sales increase by 19.6 percent year-over-year.
Incentives are also helping EV prices come closer to those of internal combustion vehicles. Buyers were offered deals worth 8.9 percent of their ATP in November, the highest levels seen in 2023. As a result, on average, EV only cost 8.5 percent more than the rest of the industry last month.
Mainstream car prices down 0.3%
Meanwhile, in November, the ATPs for non-luxury vehicles only decreased by 0.3 percent compared to the same month a year ago. Sales also saw growth, albeit less than the luxury market. This might be partially attributed to incentives being at just 5 percent, slightly lower than in the luxury market, and less than half as generous as those offered for non-luxury vehicles before the pandemic.
"In recent months, price parity between EVs and ICE has almost seemed possible," said Stephanie Valdez-Streaty, director of Strategic Planning at Cox Automotive. "It is a complicated measure with plenty of variables, but newer products and higher discounts have brought down average EV prices, even before potential tax incentives. A year ago, the EV premium was more than 30%. Today, it's less than 10%."
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Prices fall due to supply and demand changes!
LOL, what a news flash. Prices change due to supply and demand.
Since Biden came to office, most Americans have less disposable income.
Demand is low at least in part because of high interest rates due to "temporary" inflation.
Gee, I wonder how that will be spun to show how well Bidenomics is working.
As an older gentleman, have bought too many vehicles to count, along with five homes. Never once during the purchase process did the administration du jour become a consideration. Circumstances in my life dictated the decision. Do I thank an administration that I own them now? No. Do I blame an administration that it took longer than I expected? No.
Am I grateful for living in a country where all these things are attainable? Yes, eternally.
Until we can understand basic macroeconomic principles, we will always misplace blame.
As an aside, my retirement plan has never looked better with the DOW posting record highs this week.
"In November, the average transaction price (ATP) for a new vehicle was $48,247."
Still quite a hunk of change for the average citizen. And many Americans are simply not interested in EV's
Add another $19.000 in car loan interest and 72 monthly payments of $929.
Some folks will look at this article and think prices are down due to Bidenomics, when the truth is simply in today's economy, car dealers HAVE to give incentives to get sales.
Yep, the advertised reductions in this article are chump change in comparison. Add this to paying sticker price, just try to pay less than stick like EVERY car I’ve ever bought prior to 2020 and this article simply illustrates another “Bidenomics” circle jerk.
Only useful idiots buy it ……