- What is this, a real decrease in the average new vehicle transaction price (ATP)? Apparently so, said KBB, which reported that ATP in March was down from the previous month. It’s been almost two years since that happened.
- The drop was just 1.1 percent, meaning the median price is still high at just over $48,000. But it’s the first sign that the relentless upward pressure on prices is beginning to fade.
- You can probably guess the reasons, which center on the increased supply of new vehicles compared to the last few years of the global pandemic. And once buyers have options, dealers can’t use as many tricks to drive up the price.
It’s been a while—20 months, to be exact—but the average price of a new car is back below the official sticker price. For nearly two years now, the average price of new cars has been going up and up, helped by heaps of dealer profits that regularly reminded us that buying a car is a great way to get frustrated on a Saturday. But the average new car buyer paid less than the sticker price in March, according to data from Kelley Blue Book. As KBB’s Twitter account said, “Ugh.”
The average transaction price (ATP) for a new vehicle also fell in March, to a still-high $48,008. Compared to February, however, it is down 1.1 percent.
New car prices began to soar in the early days of the pandemic when supply chain issues and strong demand pushed them up, then continued to rise. In the first quarter of 2021, for example, General Motors said its transaction prices increased an average of $3,500 per vehicle compared to the previous quarter. Before the pandemic, in 2019, average prices rose $1,800 compared to 2018, then rose another $3,301 in 2020 and another $6,220 in 2021.
The return of incentives
Here in 2023, the supply of new vehicles is increasing again, and buyers are once again feeling that they have some choice to buy. That forces manufacturers to once again offer incentives, and KBB data said the average incentive rebate last month was worth 3.2 percent of the transaction, with an average rebate of $1,516. KBB said it saw average price drops at many dealerships, including Chevrolet, Chrysler, Dodge, Ford, Hyundai, Nissan and Volkswagen.
“More vehicles on dealers’ lots, and on their competitors’ lots, means dealers simply don’t have the pricing power they had six months ago,” Rebecca Rydzewski, director of research at Industry and Economic Information from Cox Automotive (owner of KBB). he said in a statement.
Will an average price of $50,000 arrive?
Where do we go from here is the big question. Toyota North America sales chief Jack Hollis said in March that he expected new car prices to exceed an average price of $50,000 sometime in 2023. That doesn’t seem outlandish, given ATP’s December $49,501. Understanding how new vehicle prices are changing means breaking them down by category. The average new luxury vehicle, for example, cost $65,202 last month, even with February’s number. Electric vehicle prices are up slightly, with an average price of $58,940 in March. It was $313 lower in February. The average price of a non-luxury vehicle in March was $44,182 and has been on a downward trend since January.
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Collaborating editor
Sebastian Blanco has been writing about electric vehicles, hybrids and hydrogen cars since 2006. His articles and car reviews have appeared in New York Times, Automotive News, Reuters, SAE, Autoblog, InsideEVs, Trucks.com, Car Talk and other outlets. His first green car media event was the launch of the Tesla Roadster, and since then he has been tracking the shift to gasoline vehicles and discovering the importance of new technology not only for the automotive industry. automobile, but for the whole world. . Throw in the recent shift to self-driving vehicles, and more interesting changes are happening now than most people might realize. You can find him on Twitter or, on good days, behind the wheel of a new EV.
