New vehicle prices remain higher than normal, averaging 7.2% above MSRP in January 2024, but price growth has started to cool in the face of improved supply levels and unstable demand.
According to automotive data platform iSeeCars.com, last month’s average new vehicle price of $45,880 is higher than last January’s amount of $45,597, which, at the time, was 8.9% over MSRP. Since early 2023, the average MSRP has gone up $904, but the dealer transaction price has stagnated, rising only $300. As such, although MSRP and transaction prices are both higher than they were a year ago, there is less distance between the two, meaning that consumers are closer to paying the recommended price than they were in 2023.
Truck and electric vehicle prices—excluding Tesla—moved closer to their suggested retail values than other models, falling from a distance of 10.1% and 8.3% over MSRP in January 2023 to 7.5% and 6.1% over MSRP in January 2024, respectively. While prices for all car types moved closer to their suggested value, hybrids and SUVs improved the least, costing 7.1% and 7% over MSRP, respectively.
However, SUV prices are the second closest to MSRP levels, beaten only by EVs. “While finding a discount on a new vehicle remains a challenge, it’s much easier for EV, large truck and SUV shoppers,” commented Karl Brauer, executive analyst for iSeeCars.com. “The market appears to have reached a saturation point for electric vehicles, with both prices and sales struggling compared to a year ago.” Furthermore, excessive truck and SUV prices, “along with the cost of fueling them in the face of inflation and reduced consumer spending power, has dampened demand for these notoriously pricey vehicles.”
Since retail price tags and MSRPs both increased over the previous year, customers are unlikely to feel any true relief at the dealership. However, less distance between the two numbers is still a positive sign for consumers. “Supply is gradually catching up with demand, which means even as new car MSRP rises the ability for dealers to charge over MSRP falls,” Brauer concluded. Although it is unlikely that new vehicle prices will reflect pre-pandemic conditions any time soon, a recovery appears much closer than it did in early 2023.
