January 2024 Sees Decline in New Vehicle Prices Amid Increased Discounts

In January 2024, increased discounts led to a noticeable dip in new vehicle prices, with the industry average transaction price falling to $47,401, reflecting a 3.5% year-over-year decrease.

To maintain sales levels, dealers have increasingly offered discounts, leading to a reduction in the average sale prices of new vehicles in January.

An increase in the availability of new vehicles combined with slower sales led to a decrease in the average amount paid by Americans for new vehicles in January 2024, with the industry-wide average transaction price (ATP) for a new vehicle being $47,401.

A 2.6 percent decrease from December was observed, which aligns with the expected slowdown in sales during January, especially following a surge in luxury vehicle purchases at year-end. However, the significant finding is a 3.5 percent decrease in ATPs compared to January of the previous year.

Erin Keating, an executive analyst at Cox Auto, remarked on the significance of the 3.5% year-over-year decline in new-vehicle ATPs, highlighting a downward pricing trend for the past six months driven by automakers enhancing deals to sustain sales momentum.

Only five automakers saw an increase in the average price paid for their vehicles compared to the previous year. Subaru’s ATPs marginally rose by 0.2 percent, Toyota Motor Corporation’s increased by 2.9 percent, Stellantis saw a 3.3 percent rise, Hyundai Motor Group’s ATPs grew by 3.9 percent, and Mazda experienced a notable 5 percent increase. On the other hand, Tesla faced the most significant industry-wide drop, with its ATPs plunging by over 20 percent from January 2023.

Keating highlighted the reintroduction of incentives and discounts by automakers and dealers to attract customers, a shift from the peak pandemic period when supply shortages led to scarce deals and frequent markups.

The average incentive last month was 5.7 percent of the ATP of a new vehicle, a slight increase from December’s 5.5 percent, and nearly double the 2.8 percent from January 2023.

However, not all vehicle categories were equally affected by discounts. Small pickups, full-size SUVs, and minivans saw less significant discounts, under 3 percent of ATP, indicating high demand for these vehicles.

In contrast, the luxury vehicle market appears to be softening, with ATPs in this segment dropping to $60,978 in January from $62,834 the previous month, reaching the lowest point since summer 2021. Luxury vehicle ATPs decreased by 9.7 percent from January 2023, with compact luxury SUVs particularly impacted, showing an 11.9 percent year-over-year price drop.

Luxury vehicle incentives averaged 6.2 percent of ATP, more than double the previous year’s figure, with the segment contributing to 19.8 percent of total industry sales in January, down from 20.6 percent in December.

Non-luxury vehicle prices also saw a year-over-year decrease of 2.1 percent in January. Similarly, the average price for electric vehicles (EVs) was $55,353, 10.8 percent lower than the previous year, despite a 3.2 percent increase from December, hinting at concerns over declining EV demand.

The average listing price for new vehicles is also trending downward, as indicated by Cox Auto data, which showed a 1 percent year-over-year decrease at the start of February, with the average listing price (ALP) at $47,142. After a peak at the end of December, listing prices began to fall in late January and have continued to decline by 1 percent weekly.

Source: Cox Auto