A new report from Kelly Blue Book reveals that new vehicle transaction prices decreased by 1.4% in February, while incentives rose 3% month-over-month.
The average car transaction now costs $48,763, which is $705 lower than January but up $2,466 from the same period last year. OEM to dealer incentives are at their highest level in nearly a year, averaging $1,474. The study also mentions that EV prices decreased by more than $1,000 on average for the third month in a row.
Rebecca Rydzewski, Cox Automotive’s research manager of economic and industry analytics said, “the transaction data from February implies that prices will continue to fall at the start of 2023.” Although both luxury and non-luxury prices decreased month over month, higher prices are a result of new models, a more varied product lineup, and restricted discounts.
The average price paid for a new non-luxury vehicle in February 2023 was $44,697 – a reduction of $681 compared to January. Most non-luxury brands experienced ATP reductions between 0.2% and 3.9%, including Chrysler, Dodge, Ford, GMC, Hyundai, Mazda, Subaru, and VW. This is consistent with stronger incentives driving down pricing. In the non-luxury market, Kia and Honda displayed the most price strength, transacting 4% to 6% above sticker price.
Elevated sales of luxury vehicles have been a major contributor to overall higher new-vehicle pricing. When compared to January, the average cost of a new EV fell by $1,050 or down 1.8% in February. According to estimates from Kelley Blue Book, the typical new EV sold for $58,385, which is still significantly more than the industry standard. Significant price reductions from
February incentives increased to 3.0% of the average transaction price from 2.8% in January, marking a 10-month high. But incentive spending is still historically low. In comparison, Kelley Blue Book calculated incentives averaged 8.3% of ATP of February 2021.
Rydzewski added, “It will be interesting to see if this increasing trend continues as inventory increases after nearly a year of incentives below 3% of ATP.”