Presidential Election, U.S. Weather Sink New-Car Prices

New-car sales volume is up, but transaction prices continue to fall.

Here’s the good news: The market could shift after the presidential election and, of course, when the weather stabilizes in U.S. areas hit by hurricanes and floods, according to Cox Automotive analysts. There is little doubt fewer incentives and higher profits will be welcome news to dealers who struggle with rising costs.

“New-vehicle transaction prices continue to be very steady this year, and higher incentive spending is helping maintain sales volume,” says Cox Automotive executive analyst Erin Keating. “We still believe there is potential for growth in the market for the rest of the year, but with the uncertainty of a national election around the corner and major weather events disrupting business, maybe a slow, steady pace is all we should expect.”  

 As those who watched the September presidential debate between Republican former President Donald J. Trump and Democratic Vice President Kamala Harris know, the two clashed on hot-button auto issues, including manufacturing jobs, Chinese imports and clean energy. The stark differences in the candidates’ viewpoints about those and other issues are expected to impact macro- and microeconomic issues tied to retail automotive markets.

So Where are Automotive Pricing and Incentives Now?

Cox Automotive’s latest report shows U.S. new-vehicle prices have remained fairly steady. The $48,369 average transaction price in January remained almost unchanged in September.

Yet incentives increased at a brisk pace, from 4.8% in September 2023 to 7.3% of manufacturers’ prices in September 2024.

“One reason transaction prices are lower in 2024 is that many buyers are choosing smaller, less expensive vehicles,” notes Cox Automotive Senior Economist Charlie Chesbrough. “The subcompact and compact SUV segments are outperforming the market this year, and by no coincidence, they’re also two of the lowest-priced product segments in the market.” 

The Mitsubishi Mirage was the only new vehicle in the U.S. still transacting for under $20,000.

The overall mix of small, more affordable vehicles has been elevated for much of 2024, helping hold down new-vehicle manufacturers’ prices. Popular vehicles include the Chevrolet Trax ($25,081), Toyota Corolla ($25,535), and Hyundai Elantra ($25,902).

SlowHigher-Priced Vehicle Sales Drag Profits Down

Increased interest in and sales of smaller, more affordable vehicles swipes sales from higher-priced vehicles, says Cox Automotive, including the fullsize pickup trucks generally priced above $65,000. And SUV sales, generally priced above $48,000, are lower by more than 5% since 2023.

Cox notes that other high-volume vehicles, including the Toyota RAV4 and Honda CR-V that routinely transact for prices below $40,000, are selling at roughly 17% below the national average.  

And September transaction prices for electric vehicles were down 0.9% from September 2023. That’s a minor dip but consider that at an average transaction price of $56,351, EV prices are about 16% higher than the average industrywide vehicle price. And those who sell EVs likely won’t see a major impact on their bottom lines. The average EV incentive of $6,094 is a 0.7 percentage point lower than August, which was the highest point of 2024.

That comes at a time when dealer lots are overflowing with new inventory. Cox reports vehicle inventories hit 2.84 million units in September across U.S. dealerships, compared with 2.61 million in January and well above 2.07 million a year earlier.

For now, it seems dealers must ride out the next few months until election results are in and economic plans are determined.