Great news for new car buyers! New vehicle prices are now increasing at the slowest rate the industry's seen in the last decade. According to Kelley Blue Book, the average price Americans paid for a new vehicle in July 2023 was 0.4% higher than one year ago, the smallest year-over-year price increase in the last 10 years.
Average Transaction Prices
According to Kelley Blue Book data:
- The average transaction price (ATP) of a new vehicle in July was $48,334, a month-over-month decrease of 0.7% ($337) from June's ATP of $48,671, and up only $199 from one year ago.
- Compared to the start of the year, KBB says transaction prices are down 2.7%, or $1,335, the largest January to July tumble in the past decade.
"New-vehicle price inflation has all but disappeared in 2023," said Rebecca Rydzewski, research manager at Cox Automotive. "New-vehicle prices, primarily driven by cuts in luxury and electric vehicles, are decreasing as inventory is steadily improving. With higher inventories and higher incentives helping to keep downward pressure on prices, there certainly are good reasons for shoppers to be heading back into the market."
Average Prices for Non-Luxury & Luxury Vehicles Decreased in July
Non-Luxury
According to Kelley Blue Book, the average price paid for a new, non-luxury vehicle in July was $44,700, down $471 compared to June. Year over year, non-luxury prices increased by only 0.5%. Big picture wise: KBB says that non-luxury vehicle prices have held remarkably steady since January, fluctuating up and down by only a few hundred bucks.
Of note: just one model transacted below $20,000 in July. KBB reports the Mitsubishi Mirage's average transaction price in July as $19,205. Researchers say that in July 2018, there were a dozen vehicles with ATPs below $20,000. But in today's market, small vehicles like the Hyundai Venue, Kia Rio, Nissan Versa and Toyota Corolla, are all transacting well over $20,000.
Read More on Kelley Blue Book.
Luxury
The luxury share of the U.S. market was 19.3% in July, the highest share so far in 2023. At the same time, luxury vehicle prices in July were down almost 3% year over year. The average luxury buyer paid $63,552 in July, down $192 from June. Since the start of 2023, luxury prices have declined by more than 5%. (KBB notes that Luxury market leader Tesla has slashed prices by more than 19% so far in 2023. )
Read More on Kelley Blue Book.
Automaker Incentive Spending Reaches 1-Year High
In more great news, auto manufacturers' incentive spend increased for the tenth consecutive month in July to the highest level since October 2021, averaging $2,148, or 4.4% of the average transaction price. That's the highest point in a year. In June it was 4.2% and year over year average incentive spending was 2.4% of ATP.
Kelley Blue Book reports that mainstream brands with particularly tight inventory – Honda, Kia and Toyota – raised their incentive spending in July but were still below the industry average.
Here's how KBB breaks down incentives by segment: High-end luxury car segment had the highest incentives in July 2023 at 9.6% followed by luxury cars at 8.4%, hybrid vehicles at 7.7%, entry-level luxury cars at 6.9% and electric vehicles at 6.7%.
On the other hand, full-size luxury SUVs, high-performance cars and sports cars had some of the lowest incentives in July.
Read More on Kelley Blue Book.
Electric Vehicle Prices Continue to Decline
Researchers say EV prices are still falling led by market leader Tesla. In July, the average EV ATP was $53,469, down from $53,682 in June and down from more than $61,000 in January.
Incentives for EVs in July were 6.7% of ATP, or $3,755. EV ATPs are down more than 19% from their recent peak of more than $66,000 just a little more than a year ago in June 2022.
To read all the data from from Kelley Blue Book click here.
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