Car buyers are finally paying below sticker price for new cars again after a 20-month period when that wasn’t the case.
In March, the average new car sales price was $171 below the average MSRP (manufacturer’s suggested retail price), a positive sign that the market is improving for buyers, who have been paying above MSRP since in the summer of 2021, according to a new report from Kelley Blue Book (KBB).
A year ago, the average selling price was almost $1,000 higher than the average MSRP.
The pandemic created a very unusual environment for car buyers. Before 2021, it was standard for car buyers to haggle at the dealership and get a new car below MSRP, often thousands of dollars below. More recently, buyers have had very little leverage because car inventories were extremely tight. So it’s a return to normal that new cars are once again being sold for less than sticker price.
While the market may be improving, the average new car price still rose $1,784 last year, new cars under $25,000 have become nearly impossible to find, and auto loan rates in the 7% have pushed monthly payments to record highs.
“Consumers are finding more inventory, more choices and dealers more willing to deal, at least with some brands,” Rebecca Rydzewski, director of research at KBB’s parent company, Cox Automotive, said in the report. “However, while deals are improving, car loan rates are unfortunately still very high, making affordability of new vehicles a problem for many households.”
What the research says
Experts have long expected new cars to become cheaper as inventory has improved while loan rates have gone through the roof. Finally, the data confirms that sales prices are falling.
- The average price of a new car fell to $48,008 in March, down $550 from last month, according to the report. Average new car prices have fallen nearly $1,500 from December’s all-time high above $49,500.
- While prices for most types of cars declined last month, the average price of a new electric vehicle increased by $313 to $58,940.
- Electric vehicle sales have been strong in 2023 thanks to new tax credits and growing supply. During the first quarter of the year, 44.9% more electric vehicles were sold compared to the same time last year, according to KBB.
The best deals on new cars
Consumers are finding better deals thanks in part to higher incentives, often in the form of cash rebates. In March, the average manufacturer’s incentive spend was $1,516, or 3.2% of the average sales price. This is the highest level in a year, but still well below the average two years ago in March 2021 of 8.4%.
Consumer Reports put together a list of some of the best incentive deals you can find right now on the 2023 models it recommends. Here are the top 10 deals on the list, most of which are SUVs.
- Mazda CX-9 Touring AWD: 11% more potential savings (PVP: $38,750)
- Chevrolet Equinox LT with 1LT AWD: 10% potential savings (RRP: $29,300)
- Chevrolet Blazer 2LT AWD: 8% more potential savings (PVP: $37,800)
- Chevrolet Traverse Premier AWD: 7% more potential savings (RRP: $49,800)
- Cadillac XT5 Premium Luxe: 6% more potential savings (RRP: $51,995)
- Ford Edge SEL AWD: 6% more potential savings (PVP: $39,345)
- GMC Acadia Denali AWD: 6% more potential savings (PVP: $50,600)
- Buick Enclave Premium: 5% more potential savings (PVP: $54,035)
- Dodge Challenger SXT: 5% more potential savings (PVV: $30,545)
- Dodge Charger R/T: 5% more potential savings (RRP: $42,385)
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