New car prices trended lower in November as the economy continued its post-pandemic balancing act, benefiting consumers but challenging dealer and automaker earnings.
According to data from Cox Automotive’s Kelley Blue Book, the average new car price was $48,247 in November, rising marginally from October but falling 1.5% year-over-year. Average transaction prices (ATP) lost ground even as the average manufacturer’s suggested retail price (MSRP) gained an extra percentage point from last year. As a result, buyers were paying 98.3% of their new vehicle’s MSRP last month.
This gap between ATP and MSRP indicates that automakers and dealers are increasing their usage of incentives and discounts in the hopes of spurring demand. In fact, incentives have risen 136% over the last 12 months and accounted for more than 5% of the average new car price in November for the first time since 2021.
Among the 35 brands analyzed by Cox Automotive in November, the company whose vehicles depreciated the most was Tesla, which saw prices decline 20.5% from November 2022. This is nothing new for the electric vehicle maker as it has continued to implement heavy discounts across its lineup since December of last year in response to falling demand, but it does represent one of the most rapid declines seen in recent memory. In comparison, the next three brands with the sharpest price dips were Buick, Land Rover, and Nissan, which recorded drops of only 6.4%, 6%, and 5.7%, respectively.
On the other hand, Dodge models saw the most appreciation, with new car prices gaining 11.2%, followed by Ram with 10.5%, Audi with 7.8%, and GMC with 7.8%.
Throughout the year, new car prices have fluctuated as automakers and dealers adjusted to the changing market landscape. In the third and second quarters, however, they have trended firmly downward under normalizing demand. While this has caused dealership profits to fall, revenues remain well ahead of their pre-pandemic averages, and savvy retailers still have numerous opportunities to bring buyers back into the showroom. Aggressive strategies that raise service scores, improve retention, and generate more leads will be key to dealership success in the months ahead.
