Great news for car shoppers when it comes to new vehicle prices. According to Kelley Blue Book (KBB), new vehicle average transaction prices dropped to their lowest level in nearly two years in March.
KBB data shows that new-vehicle transaction prices (ATP) in March 2024 held mostly steady, down 1% from the revised February ATP. Last month, the average transaction price of a new vehicle in the U.S. was $47,218, down 1% from March 2023 and down 5.4% from the market peak in December 2022. All this said, new-vehicle prices in the U.S. are still up by 15.5% compared to March 2021.
Here are some highlights of KBB's recent analysis of the new vehicle market in March:
- New-vehicle average transaction prices (ATP) in March 2024 declined from February and were lower year over year by 2.7%; new-vehicle ATPs are now down 5.4% from the December 2022 peak.
- Electric vehicle (EV) prices increased in March but were lower by 9.7% year over year, led by strong incentive packages; volume leader Tesla posted higher prices after hitting bottom in January.
- Consumers have fewer affordable options, with only eight new vehicles transacting for under $25,000 in March, down from 30 in March 2021.
KBB says the most important factor in recent sales results compared to last year is the supply recovery. At the start of March, new-vehicle inventory in the U.S. stood near 2.74 million units, a 52% increase from one year earlier. Sales were down month over month in March, but with a seasonally adjusted annual rate (SAAR) of sales of 15.5 million, KBB predicts that 2024 remains on track to be the best new-vehicle sales year since 2019.
"A healthy 15.5 million new car SAAR is welcome as consumers enjoy lower prices thanks to significant supply recovery and a doubling of incentive spend compared to last March," said Erin Keating, executive analyst for Cox Automotive. "However, it bears repeating that historically high interest rates and associated inflation combined with an ever-widening deficit of available vehicles at lower price points, will continue to challenge affordability for most car buyers."
Higher Incentives Hold New-Vehicle Prices Down
Increasing new vehicle inventory is leading to higher automaker incentive spending. KBB's analysis of March numbers found that the average incentive spending from automaker's increased 11% to $3,121. That's up 102% year over year. Reaching the highest level since May 2021, incentives as a percentage of average transaction price increased to 6.6%, up from 5.9% in February and more than double the average of 3.2% recorded in March one year ago. After hitting a low of 2.1% of ATP in September 2022, incentives have steadily increased along with inventory.
You'll find higher incentives on luxury vehicles. KBB says they continue to be more generous than non-luxury. In March, incentives in the luxury market averaged 7.5% of ATP, down from February and more than twice the level seen one year ago. The luxury ATP in March was $62,067, a decrease from February. Non-luxury vehicle incentives, on the other hand, averaged 6.4% in March, an increase from 3.8% in February. Non-luxury vehicle ATPs last month were $44,083, down from February when prices were estimated at $44,548.
In more good news, KBB reports that more automakers offered incentive packages over 10% of ATP in March compared to February.
According to KBB estimates, March incentives were highest for:
- Polestar
- Lucid
- Tesla
- INFINITI
- Mini
- Nissan
Only three automakers – Land Rover, Porsche and Toyota – had incentives at or below 3.2% of ATP, the average incentive one year ago. KBB says according to its estimates, incentives at Land Rover averaged only 2.4% of ATP. Yet, the average price paid for a new Land Rover last month was still above $101,000.
For more information on last month’s prices, visit Kelley Blue Book here.
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