Decline in the average price of new cars
“The new car price spike appears to have peaked,” said Michelle Krebs, executive analyst for Cox Automotive. Cox Automotive is the parent company of Kelley Blue Book.
Prices will continue to fall, but slowly
Krebs expects prices to fall further, but slowly.
“While we expect vehicle supply to improve, it will continue to be tight, particularly in the first half of the year,” she said. “For this reason, we expect prices to remain high for the foreseeable future, but car buyers can rest assured that we are no longer anticipating record highs.”
A global shortage of microchips – the average new car contains more than 100 – has forced automakers to cut production. This kept prices high through simple supply and demand.
Non-luxury cars decline faster
But prices have also risen because Americans continue to choose more expensive vehicles. The final sale price of the average non-luxury car has fallen for three straight months, but Americans have bought enough luxury vehicles to keep the overall average up.
Car buyers are in luck; Minivan Buyers Don’t Care
Car buyers are still paying more than $900 more than the average list price. Consumers have paid more than MSRP for each of the past eight months, while a year ago non-luxury vehicles were selling for more than $1,600 below MSRP.
The average luxury buyer paid $64,635 for a new vehicle in January. That’s down $804 from the December numbers, but still more than $1,300 above the list price.
Cars saw larger declines than any other type of vehicle. The average new car sold for $1,263 less in January than in December. SUV buyers paid an average of $45,512, a decrease of $913. Truck buyers recorded the smallest decline. They paid $54,331 on average, $483 less than a month ago.
Minivan buyers, however, had the worst of it. The price of the average minivan increased by $1,308 to an average transaction price of $48,207.
Incentives still rare
While buyers may be able to negotiate a lower transaction price than they might have had a month ago, they can’t count on much help from advertised discounts. Incentives accounted for just 3.9% of the average sale last month, matching the record low set in December 2021.