The consistent trend of new vehicle transaction prices ended in February, with the average price falling 1.4% or $705.
According to data from Kelley Blue, the average transaction price of a new vehicle fell to $48,763 from $49,468 in January. However, the prices are still significantly higher on a year-over-year basis, rising $2,466 on average, or 5.3%.
A few things combined to help push prices down, but one factor we haven’t seen in some time is a jump in incentive spending. It rose 3% to an average of $1,474 — it’s highest mark since March 2022. Despite this, consumers were still paying more than the sticker price of new vehicles, Cox Automotive Inc. noted.
In February, the average price paid was just $95 more than the average sticker, as prices continued to trend downward relative to sticker price.
Still higher than normal
A year ago, the average ATP was nearly $1,000 over MSRP. Last month, sales volumes were up month over month by 9% and also up 9% year over year, thanks in part to improved supply and added fleet sales. A tougher economy and high loan rates are putting downward pressure on retail demand.
“The transaction data from February indicates that prices continue a downward trend at the beginning of 2023,” said Rebecca Rydzewski, research manager of economic and industry insights for Cox Automotive. “Both luxury and non-luxury prices were down month over month, but new models, richer product mix and limited discounting are contributing to elevated prices.”
The average price paid for a new non-luxury vehicle in February 2023 was $44,697 — a decline of $681 compared to January. The majority of non-luxury brands — including Chrysler, Dodge, Ford, GMC, Hyundai, Mazda, Subaru and Volkswagen — saw ATP declines between 0.2% to 3.9% month over month in February.
This correlates with higher incentives helping to push prices down. Kia and Honda showed the most price strength in the non-luxury market, transacting between 4% and 6% over sticker price in February, Cox analysts noted.
Luxury car prices fell too last month, although they retained a strong share of the market.
High-end vehicles accounted for 19.5% of total sales, down slightly from the record high 19.7% in January. The high share of luxury sales pushes the overall industry ATP higher, even though the luxury ATP declined month over month, analysts noted. The luxury share has grown substantially in recent years, accounting for just 13.2% of the market in February 2018.
In February 2023, the average luxury buyer paid $65,534 for a new vehicle, down $644 from January. Buyers continue to pay over MSRP for new luxury vehicles.
Luxury vehicle ATPs were a mixed bag in February, with luxury cars, luxury full-size SUVs and luxury midsize SUVs showing price declines between 0.3% and 4.1%. Entry-level luxury cars prices remained stable, while luxury compact SUVs and luxury subcompact SUVs saw price increases between 0.6% and 1.4%.