New vehicle average transaction prices (ATP) dipped slightly in February, but consumers still face affordability challenges, according to Kelley Blue Book, a division of Cox Automotive.
Between January and February, ATPs dropped less than one-tenth of 1 percent. The average transaction price of a new vehicle in the U.S. was $47,244 last month, down 2.2% from February 2023 and down 5.4% from the market peak in December 2022, reports KBB. Still, new-vehicle prices in the U.S. remain higher by nearly 14% compared to February 2021.
“While everyone may applaud that prices are coming down, even marginally for the moment, affordability is still challenging the market,” says Cox Automotive executive analyst Erin Keating. “Most shoppers have not seen their incomes increase as quickly as vehicle prices, so affording a new vehicle remains difficult.”
One reason for the dipping prices is manufacturers’ new-vehicle incentives. In February, those incentives averaged 5.9% of transaction price, up from 5.7% in January and significantly higher than the average of 3.1% recorded in February one year ago.
That’s in contrast to September 2022, when incentives hit bottom – 2.1% of ATP. Since that time, incentives have increased along with dealers’ inventories.
In February, incentives in the luxury market averaged 6.1% of ATP, down from January but nearly twice the level seen one year ago. Non-luxury vehicle incentives averaged 5.9% in February, up from 5.5% in January. Non-luxury vehicle ATPs last month were $44,052, virtually unchanged from January when prices were estimated at $44,062.
Other points from the Cox report:
Of the roughly 275 different models available in the U.S. market in February, only nine had transaction prices below $25,000.
The ATP for an electric vehicle in February was $52,314, down from a revised $54,863 in January.
Incentive packages continue to be highest with Infiniti, Audi, Mini, and Polestar, all over 10% of the ATP, according to Kelley Blue Book estimates.
Lexus, Toyota, Porsche and Land Rover had some of the lowest incentives last month, all 3.0% or lower. Incentives at Land Rover averaged only 2.0% of ATP, according to the Kelley Blue Book estimates. Still, the average price paid for a new Land Rover last month was over $102,000.
“Our research continues to show that price remains a significant barrier for consumer adoption,” says Stephanie Valdez Streaty, director of industry insights at Cox Automotive. “While the higher inventory levels and increased competition continue to drive down the price premium of EVs, it’s important to acknowledge that EVs remain priced above mainstream non-luxury vehicles by nearly 19%.”
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