The final selling price of the average new car in America last month… wait. The mood isn’t quite right for this story.
Why don’t you get up and lie down for a minute? Fill your coffee or tea. Check the last text from someone you love. Put on some music. Something soft. You might find a blend labeled “spa.” Come back when you’re ready.
here we come
The final selling price of the average new car in America fell last month. Incentives (discounts that dealers or factories give to help lower the selling price) increased. Chocolate has no calories. You look amazing.
Okay, we’re spilling it a little. But you see, we’ve been writing stories for two years now about how new car prices are skyrocketing, incentives are disappearing, and you’ll be lucky to even find a car you want to buy, so you better be prepared to overpay. for that.
So it feels really good to write this. And this is truly one of your best outfits.
The average new car in the United States sold for $48,763 in February, down 1.4% from January’s figure.
It is still 5.3% more than a year ago. But it’s the third month in a row of declines — a sustained drop in prices.
Related: The best new car deals this month
The average new car sale included incentives worth $1,474, a level not seen since last March.
The incentives are back
Incentives hit a 10-month high in February 2023, rising to 3.0% of the average transaction price, up from 2.8% in January.
Incentives remain at a historically low level. By comparison, in February 2021, Kelley Blue Book estimates that incentives averaged 8.3% of the average transaction. Luxury cars had the highest incentives in February, at 6.5% of the total price. Meanwhile, vans had the lowest incentives, at less than 1%.
Still out of sticker, but so close
The average new car has sold for more than its list price for more than a year. That was true last month, but just barely: The average selling price was just $95 over sticker. Another month of declines will almost certainly bring it down.
“February transactions data indicate that prices continue to trend downward into early 2023,” said Rebecca Rydzewski, director of industry and economic information research at Cox Automotive. “Both luxury and non-luxury prices fell month-over-month, but new models, a richer product mix and limited discounts are contributing to higher prices.”
Cox Automotive is the parent company of Kelley Blue Book.
Non-luxury prices fall
The average non-luxury car sold for $44,697, a decrease of $681 compared to January. Most non-luxury brands, including Chrysler, Dodge, Ford, GMC, Hyundai, Mazda, Subaru and Volkswagen, saw price declines between 0.2% and 3.9% monthly in February.
This correlates with higher incentives that help lower prices. Kia and Honda dealerships were the hardest places in the non-luxury market to find a deal last month. In February, they sold cars for 4% to 6% over sticker price.
Americans continue to buy a lot of luxury cars
Economic conditions have pushed prices up for two years, but so have Americans’ choices. Luxury vehicles accounted for nearly 20% of sales in early 2023, an all-time high. They fell slightly in February, accounting for 19.5% of all new car sales.
In February 2023, the average luxury buyer paid $65,534 for a new vehicle, down $644 from January. Buyers continue to pay more than MSRP for new luxury vehicles.
Luxury brands Alfa Romeo, Audi, BMW, Infiniti, Lincoln and Volvo sold their average vehicle for 1% or more below sticker price. Mercedes-Benz and Land Rover sat on the opposite side of that wobble, selling between 5% and 7% higher.
Electric vehicle price drops contribute to the average drop
Electric vehicles (EVs) are doing more than their share of work to lower the average price.
The average new electric vehicle sold for $58,385, according to Kelley Blue Book estimates, which is still well above the industry average. But it is $1,050 lower (1.8%) compared to January.
The price drop was driven by major price cuts by Tesla, which dominates about two-thirds of the electric vehicle market. Tesla’s average transaction prices decreased by $977, down 1.6% month-over-month and 5.9% year-over-year. Lower prices likely helped Tesla deliver higher sales volumes. Tesla’s February sales were up more than 44% from a year earlier.
Now, go for a walk outside. Dream of lower monthly payments.
