New vehicle prices have dipped under rising supply levels, signaling a return to a consumer-friendly market.
At the start of February, new vehicle inventory reached the highest levels since June 2020, according to Cox Automotive, reaching an 80-day supply average. Approximately 2.61 million units were on standby at the start of the month, up 50% from the same time last year, although the number is roughly 500,000 units behind January’s level of 2.66 million.
The increase in availability coincided with a surge in new vehicle affordability. While final transaction prices were stable at the start of January, their levels dipped in the latter half of the month, falling at a rate of 1% per week. Thus, the month’s transaction price average was $47,401, down 4% year-over-year and 3% month-over-month. The average listing price in February was $47,142, down 1% from early 2023.
Improved new vehicle supply and lower prices typically benefit the consumer. However, the current affordability picture is more nuanced. While overall affordability has improved slightly thanks to marginal income growth over the month of January, credit access has tightened, preventing a more notable recovery.
Nevertheless, should inventory and price levels continue in their current direction, a trend that seems likely given the state of the industry, the market will become far more favorable to consumers than it has been at any point since the COVID-19 pandemic.
