New vehicle prices fell slightly in September, according to analysts at Kelley Blue Book. Researchers attribute the dip in prices largely to price cuts at Tesla. KBB reports:
- The average transaction price (ATP) for a new vehicle in September 2023 was $47,899, a 0.7% decline year over year; ATPs are down 3.4% from January as incentives continue to increase.
- Tesla's price cuts have moved the market, pushing electric vehicle (EV) prices down more than 22% year over year, from $65,295 to $50,683.
KBB also reports that General Motors pulled way back on incentives in September due to the United Auto Workers (UAW) strike (which started September 14th) and lower inventory levels.
The Car Pro Jerry Reynolds has warned car shoppers about the UAW strike's potential impact to incentives. Tune in to the CarPro Show this weekend for his latest thoughts on the UAW's ongoing strike against the Detroit Big Three. Click here for stations and times →
New Vehicle Prices Dip Slightly in September
KBB reports that the average price Americans paid for a new vehicle in September 2023 was down 3.4% from the start of the year, as higher inventory levels and increased incentives continued to put downward pressure on pricing. The average transaction price of a new vehicle in September was $47,899, down $360 from one year ago (0.7%), according to KBB, a Cox Automotive company. Prices decreased by $227 (0.5%) from August's downwardly revised ATP of $48,126.
"After new-vehicle prices peaked at nearly $50,000 at the start of 2023, we're seeing average transaction prices dip below $48,000 for the first time in more than a year," said Rebecca Rydzewski, research manager at Cox Automotive. "Dealers and automakers are feeling price pressure, and with auto loan rates at record highs and growing inventory levels, new-vehicle prices continue to ease. Assuming the UAW strike is short-lived, current inventory levels are healthy enough to prevent any significant impact on consumer prices."
UAW Strike Impacts GM's Incentive Spending
In the October 11th report, KBB reported that General Motors had slashed incentive spending on all four of its major brands in September. Analysts say GM's inventory levels were far below Ford Motor Company and Stellantis. General Motors' average incentive as a percentage of transaction price was 4.0%, down from 4.7% in August and below the industry average of 4.9%. Both Ford and Stellantis, which have inventory levels well above the industry average, saw average incentive packages increase month over month in September to 5.2% and 7.3%, respectively. GM and Stellantis posted higher ATPs month over month in September, while Ford ATPs declined less than 1%, aligned with the industry average.
Non-Luxury Vehicle Prices Increase Less Than 1% Year Over Year
KBB says car shoppers paid an average price of $44,626 for a new non-luxury vehicle in September, up 1% from one year ago. Non-luxury prices were down $82 from the month prior. Meanwhile, analysts report the average incentive spend in the non-luxury segment was 4.7% of ATP in September, up from 2.3% one year ago. Month over month, incentive spending was flat.
KBB researchers say only three vehicle segments had average transaction prices below $30,000 in August: compact cars, subcompact cars and subcompact SUVs. But all three segments saw month-over-month price increases. September's lowest-priced vehicles in the U.S. market were the Mitsubishi Mirage and Kia Rio—the final two vehicles still transacting under $20,000. Both models are expected to be discontinued in the coming years as the market shifts away from sedans.
Average Luxury Prices Down Year Over Year, Largest Decline in a Decade
Luxury vehicle prices in September fell by $873 compared to August, according to KBB data. Luxury transaction prices were down 6.2% year over year to $62,342. KBB analysts say that since the start of 2023, luxury prices have declined by almost 7%. Overall, the luxury segment continued to deliver strong results in September, holding an 18.5% share of the U.S. market.
Tesla Price Cuts
KBB says aggressive price cuts at Tesla are the primary reason for the luxury price declines this year, as Tesla is the luxury market leader. Compared to September 2022, Tesla transaction prices are down 24.7%; Tesla Model 3 prices are down more than 26% year over year to $41,484, well below the average luxury car price. Tesla average transaction prices are now lower than Acura, Lexus, INFINITI and Volvo.
KBB says Tesla's price cuts have offset price gains by many luxury automakers. Audi, Mercedes, and Porsche all booked year-over-year price increases in September, with Mercedes ATPs up more than 10%. Audi and Porsche posted a year-over-year increase of more than 8%. BMW, Cadillac, INFINITI, Land Rover, and Lexus also posted price increases. Brands with year-over-year price declines in September included Buick, Jaguar and Volvo.
Luxury Incentives
KBB reports that luxury vehicle incentives have significantly increased year over year, rising from an estimated 1.7% of ATP a year ago to 5.7% last month. Luxury vehicle sales in September were up 19% year over year, helping to push overall industry volume higher by more than 18%. During the same timeframe, non-luxury sales were higher by 17%.
Electric Vehicle Prices Continue to Decline
EV prices continue to fall, led again, KBB says, by market leader Tesla. In September, the average price paid for an electric vehicle was $50,683, down from $52,212 in August and down from more than $65,000 one year ago. Incentives for EVs in September were 9.8% of ATP, or $4,991.
EV availability is also well above the industry average. At the start of October, KBB says EV availability, as measured by days' supply, was well above the industry average as product availability and EV production rapidly increases. At the beginning of the year, EV and internal combustion engine (ICE) inventory started the year off pretty evenly, at about 52 days' supply. But since the, EV days' supply dramatically increased while ICE remained consistent between 52 and 58 days. EV supply at the start of October was 97 days, down from the peak inventory of around 111 days during early July.
"EV sales continue to grow in the U.S., partly due to strong supply and more choice," said Stephanie Valdez-Streaty, director of Industry Insights at Cox Automotive. "At last check, we had 15 new EV models for sale that were not available a year earlier. Better choices and more options are helping push prices lower and drive higher sales."
Manufacturer Auto Incentives Reach 24-Month High
Incentives are the highest they've been in 24 months according to KBB data. They averaged $2,368 in September, and were 4.9% of ATP. While September incentives were essentially flat month over month, they remain historically low. For comparison, KBB estimates that incentives averaged 10% of ATP in September 2020 and 10.2% in September 2019.
Here's a breakdown at which segments had the most incentives in September 2023:
- High-end luxury cars - 10.6% ATP
- Electric vehicles - 9.8%
- Luxury Cars - 7.4%
- Entry-level luxury cars - 7.1%
- Full-size pickup trucks - 6%
KBB says that vans, high-performance cars, and small and midsize pickup trucks had some of the lowest incentives in September.
To check out KBB's data tables click here.
Photo credit: Wellnhofer Designs/Shutterstock.com.