In what is becoming a recurring headline every month or so, the average new-vehicle transaction price in December 2022 was $49,507, an increase of 1.9%, or $927, from November.
It is also up 4.9% or $2,297, from December 2021, according to Kelley Blue Book. The record pricing comes despite the fact new vehicle inventories are growing, with some models, such as the Ford Escape recording a 93-day supply, and the and the Acura TLX with a 70-day supply, according to Automotive News. A 60-day supply has long been considered average, but that has not been the norm since the Pandemic.
Consumers have been paying more than the manufacturer’s suggested retail price for more than a year. When combined with higher loan interest rates, it’s caused sales volumes to decline from November, despite the fact that December 2022 volumes were up from the same period in 2021.
Prices remain stratospheric
The average price paid for a new non-luxury vehicle in December was $45,578 — a record high. That includes the Ford F-Series, America’s bestselling vehicle, which had an average transaction price of $66,451, which is nearly as much as what luxury car buyers paid.
Of course, luxury vehicle sales remained strong in December 2022, reaching a record high 18.6% market share, with an average new-vehicle transaction price of $66,660. But unlike mainstream vehicle prices, that’s down $216 from November luxury rides are selling below MSRP in December, particularly luxury compact and sub-compact SUVs.
That said, some marques have stronger pricing power than others — a longtime truism of auto retailing. Mercedes-Benz and Land Rover sold from 2.6% to 6.5% more than MSRP last month, while Audi, BMW, Infiniti, Lexus, Lincoln and Volvo sold for 1% or more less than sticker price.
And incentives, which are at historically low levels, are starting to increase, rising to 2.7% of the average transaction price, up from 2.2% in November. Notably, electric vehicles carried the highest incentives due to Tesla, which averaged 6.2% of the average transaction price, as compared to luxury cars at 5.8 percent. Vans, minivans and full-size SUVs had the lowest incentives, at less than 1 percent.
Other prices are falling
But used car prices are experiencing sales declines, according to Manheim, the auto industry’s largest used car auction house. Overall, despite a one-month increase of 0.8% from November to December 2022, used car prices declined 14.9% last year.
Fewer sales closed on average, as buyers saw their bargaining power increase. In particular, Manheim reported the price of three-year-old vehicles fell 2.2 percent. The price of compact cars fell the most from the same period a year earlier, declining 13.5%, followed by sports cars at 12.6, pickups at 12.2%, and vans at 12 percent.
Those prices mirrored declining foot traffic, as Dealertrack reports that used vehicle sales fell 7% from November to December, even though dealer inventory fell to 52 days in December from 54 days in November.
If there was any bright spot for retailers, it was rental, commercial, and government fleet sales, with 47% year over year in December.
And the price of filling up is falling as well, with the AAA national price of a gallon of regular fuel averaging $ 3.267 on average, down from $3.277 last month. Premium fuel’s decline is similarly slight, falling to $4.010 from $4.034 a month ago. Those refilling with diesel saw far bigger savings this month, averaging $4.627 from $4.939 last month. But those refueling with E85 are out of luck. Prices rose to $2.703 from $2.677 a month ago.
Here’s the catch
But not all motoring costs are falling.
According to a report issued by Lending Tree, insurers are expected to raise car insurance premiums by an average of 8.4% in 2023 based on rate filings submitted by Insurers, with premiums are expected to rise in 45 states. States where drivers face the largest average increases include Illinois at 17% followed by Arizona at 15.6% and New Hampshire at 13.6 percent.
And be sure to watch your speed. Getting a moving violation will cause your rate to jump an average of 52%, with premiums jumping more than 100% in North Carolina and California. And while your new electric vehicle will save you money on fuel. It will cost an average of 28% more to insure than one powered by fossil fuel.
At $3,576, the Porsche Taycan will have the highest EV insurance premiums in 2023, while the Mini Cooper Electric at $1,917 will have the lowest. Overall, crossovers cost the least to insure on average, coming in at $1,979, followed by sedans at $2,163, pickups at $2,347 and SUVs at $2,474.
Among pickup trucks, Ford F-150 Lightning buyers have the lowest insurance at $2,043, followed by Ram at $2,135, the F-Series at $2,330, Rivian R1T at $2,340, GMC Sierra at $2,422, and Chevrolet Silverado at $2,551.
But if you want to truly save money on your car insurance bill, the answer is to buy a Honda CR-V. At $1,900, it has the lowest average insurance rate, according to the study, although the average rate for full car insurance in the U.S. is $1,780 annually.
