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  • Another New Record:  New Car Prices Top $49,500 In December

    Another New Record:  New Car Prices Top $49,500 In December

    New vehicle prices ended 2022 on a record-high note - with the average new vehicle transaction price (ATP) inching ever so closer to the $50,000 mark.  According to Kelley Blue Book (KBB), the ATP of a new vehicle in December was $49,507, up 1.9% ($927) from November and up 4.9% ($2,297) from year-earlier levels. It's the continuation of a trend that shows no signs of reversing soon. KBB says new-vehicle ATPs have been above the average manufacturer's suggested retail price (MSRP) for more than a year.

    The bottom line is that new vehicle prices remain high, despite the fact that inventory is rebounding from historic lows earlier in 2022.  Luxury car sales play a role too. They jumped to a record 18.6% share of total sales in December, which lifted the overall industry ATP.   At the same time,  electric vehicle prices dipped more than $3,500 month over month thanks to Tesla slashing prices in a year-end sales push.

    When it comes to sales volume, December sales were down from November. But higher than they were year over year.

    Check out full-year 2022 auto sales numbers by brand here →

    "The transaction data from December clearly indicates overall prices showed no signs of coming down as we headed into year-end," said Rebecca Rydzewski, research manager of economic and industry insights for Cox Automotive. "Luxury prices fell slightly in December, but non-luxury transaction prices were up. Truck sales were particularly strong last month, and with many trucks selling for more than $60,000, a new record was all but inevitable."

    According to Cox Automotive estimates, while new-vehicle inventory is steadily improving, some brands are doing better in that regard than others.

    "Incentives overall are still very low but trending upwards. Electric vehicles and luxury cars had incentives close to 6% of ATP, and both saw ATP decline in December as a result. Plus, with the new tax credits on the way, electric vehicle ATPs will drop lower for qualifying vehicles," added Rydzewski.

    Average Non-Luxury Car Prices Increase to Record High

    The average price paid for a new non-luxury vehicle in December was $45,578—a record high and up $994 month over month. The previous record high was in August 2022. Trucks remain extremely popular and sales were particularly strong in December. KBB says over 270,000 trucks were sold for the first time since the spring of 2021. The average price paid? Over $59,000. The Ford F-Series is once again the best-selling vehicle in the U.S. -- and Ford sold more than 75,000 F-Series models in December, its best month all year. KBB estimates the average price paid for a new F-Series reaches into luxury territory at $66,451.  

    KBB reports that most non-luxury brands had stable pricing or declines in December. Honda and Kia were the non-luxury brands with the most price strength with transactions between 5% and 6% over sticker price in December. 

    Luxury Share Hits Record High, While Average Prices Fall  

    Strong luxury car sales are a main reason for overall elevated new car prices according to KBB. And is as typical, luxury sales were up in December. KBB says they jumped to a record 18.6% of total sales, up from 18.2% in November.  It follows that higher priced luxury vehicles helped push the overall ATP higher as well. Consider this too - just five years ago in December 2018, the luxury market share set a record at 16.5%. Every month in 2022, KBB reports the luxury share was higher.

    In December 2022, the average luxury buyer paid $66,660 for a new vehicle, down $216 from November. While KBB says buyers continue to pay over MSRP for new luxury vehicles, it's not by much. Researchers says luxury cars at all levels were selling below MSRP in December, along with luxury compact and sub-compact SUVs.

    Mercedes-Benz and Land Rover buyers paid the most over sticker last month with sales transacting between 2.6% to 6.5% over sticker price. Audi, BMW, Infiniti, Lexus, Lincoln, and Volvo showed the least price strength, selling 1% or more below MSRP.

    Tesla Slashes Prices, EV Prices Drop 

    Tesla - which commands 65% of the EV segment - highly influenced the EV market this year. Earlier in the year it increased prices, before slashing them at the end of the year.  KBB says Tesla's significant price reductions cut ATP EV prices in December by $3,594 - a dip of 5.5% compared to November. They also ended the year the lower by 0.6%. Still, EV prices are high with the average new EV selling for $61,448 in December, well above the industry average. 

    Auto Incentives Remain Historically Low, But Are Increasing

    On the plus side, there were more slightly more incentives out there in December. KBB says incentives increased to 2.7% of the ATP. That's up from 2.2% in November. But it was lower year over year with incentives averaging 3.8% of the ATP in December of 2021. Compare that to 2019 when the average incentive package was 10.9% of ATP.

    Electric vehicles had the highest incentives in December, which KBB says was influenced by changes at Tesla, at 6.2% of ATP, followed closely by luxury cars at 5.8% of ATP. Meanwhile, vans, minivans and full-size SUVs had the lowest incentives, all less than 1% of ATP.

    For a look at KBB's data tables with detailed info by manufacturer and segment click here.

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