New data released by Kelley Blue Book, a Cox Automotive company, shows that the upward trend in US prices broke in March 2023, when the average price consumers paid for a new vehicle fell below manufacturer’s suggested retail price (MSRP) for the first time in 20 months.
“The average transaction price (ATP) of a new vehicle in the United States decreased in March 2023 to $48,008, a monthly decrease of 1.1% ($550) from a downwardly revised February reading of $48,558,” the report states. “March 2023 transaction prices held at 3.8% ($1,784) compared to year-ago levels. Meanwhile, automakers’ incentive spending rose to the highest level in 11 months at 3.3% of ATP in March 2023, averaging $1,516.”
According to Kelley Blue Book calculations, new vehicle ATPs have been above average MSRP (also known as sticker price) for 20 months, but last month brought good news for buyers as that trend finally turned.
In March 2023, transaction prices continued their downward trend and the average price paid by consumers dropped to $171 below label average. For comparison, Kelley Blue Book notes that a year ago, in March 2022, the average ATP was nearly $1,000 above MSRP.
Sales volumes are also reported to have increased 20% month-over-month and 8% year-over-year in March 2023, thanks in part to a improved offering, a better mix of lower-priced models, and strong fleet sales.
“The latest transaction data for March reveals that new vehicle prices continued on a downward trend during the first quarter of 2023said Rebecca Rydzewski, manager of economic and industry information research at Cox Automotive.
“Both luxury and non-luxury prices are down month-over-month. We have been anticipating declines in transaction prices, as inventory has steadily improved and options have expanded. More vehicles on dealer lots, and on their competitors’ lots, means dealers just don’t have the pricing power they did six months ago,” added Rydzewski.
When it comes to EV prices, these rose slightly in March even as Tesla cut prices, bucking the downward trend. The average price paid for a new electric vehicle increased $313 (up 0.5%) in March 2023 compared to February 2023. The average new EV sold for $58,940 in March, according to Kelley Blue Book estimates, which is still well above the industry average.
“Right now, consumers in the marketplace are finding more inventory, more choice, and dealers more willing to deal, at least with some brands. However, although the offers improve, unfortunately car loan rates are still very high, which ultimately makes new vehicles affordable. a problem for many homes,” Rydzewski said.
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