In May, new vehicle prices in the U.S. continued their downward trend, remaining lower year-over-year for the eighth consecutive month. According to Kelley Blue Book estimates, the average transaction price (ATP) for a new vehicle in May was $48,389, a slight increase from April’s revised ATP of $48,368. This represents a 0.9% decrease, approximately $442, compared to May 2022.
Higher inventory levels have been a significant factor in holding down transaction prices. As of early May, new-vehicle inventory was estimated at 2.84 million units, up 51% year-over-year and the highest since late 2020, according to vAuto Live Market View. This surplus in inventory has pressured prices downward, providing consumers with more choices and prompting dealers to offer more incentives.
The increase in incentives has also contributed to making new vehicles more affordable. The average new-vehicle incentive package in May was 6.7% of the ATP, roughly $3,200, up from 4.0% a year ago and the highest level since May 2021.
Erin Keating, executive analyst for Cox Automotive, noted, “In May, we saw some positive news on the sales front. A lot of those sales gains were juiced by higher incentives and lower prices, which is good news for consumers worrying about inflation. While many vehicles transact at very high prices, that doesn’t mean all new vehicles are unaffordable. Many excellent, well-priced vehicles remain, particularly in the compact segments.”
Despite higher inventory levels contributing to lower overall prices, the market dynamics remain complex, with expensive, high-volume models influencing average industry prices. In May, four of the top 10 best-selling vehicles were full-size pickup trucks – the Ford F-Series, Chevrolet Silverado, Ram Pickup, and GMC Sierra – all of which had ATPs above $60,000. These high-volume models significantly impact the overall ATP calculations.
Conversely, five of the top 10 most popular vehicles transacted below $40,000, well below the industry average ATP. The Toyota RAV4 and Honda CRV, both among the top sellers, had transaction prices averaging $37,608 and $37,364, respectively.
Keating added, “It’s called an average for a reason. The U.S. market is very diverse, with plenty of popular, high-priced vehicles that sell very well and drive the average higher. The popularity of fully loaded, full-size pickup trucks that are more luxurious than many luxury vehicles is unique to the U.S. market. The Ford F-Series outsold BMW 2-to-1 in May, and BMW’s ATP was only marginally higher than the F-Series.”
In May, the share of vehicles transacting below $40,000 increased, accounting for 41.2% of new vehicle sales compared to 36.8% in May 2023. This shift indicates a trend towards more affordable models. On the higher end, nearly 100 models posted ATPs above $60,000, making up 26.4% of total sales, up from 20.4% in May 2023.
