New car prices move down in July...barely

Author

Colin Velez
August 14, 2024

New

New vehicle prices are falling at an agonizingly slow pace, despite increases in inventory and incentive levels.

Driving the news: The new vehicle average transaction price (ATP) was nearly flat year-over-year in July, according to Kelley Blue Book data, although it remains around 3% lower than the peak in 2022.

  • New vehicle ATP was $48,401 for July. This is $23 less than the $48,424 recorded in June and $106 less than last year’s $48,507.

  • Sales of full-size pickups, which sold for an average price of $65,713, helped drive the ATP higher, despite above-average incentive levels (8.1%). The segment accounted for 14% of new vehicle sales during the month.

  • Ford’s F-Series and Chevy’s Silverado were July’s two top-sellers. The Tesla Cybertruck remained America’s best-selling vehicle over $100,000.

Zooming in: While sales of expensive models kept the month’s ATP higher, other factors suppressed car prices.

  • Inventory levels remain higher than last year by 52%, dragging down overall car values.

  • Affordable models continued to see increased popularity, especially in the compact SUV (ATP of $36,621) and subcompact SUV (ATP of $29,827) segments.

  • Vehicles from both categories accounted for roughly a quarter of July's auto sales.

Key quote: “Not every brand is seeing sky-high days’ supply, but, in most cases, where there is excess, incentives are climbing. The higher incentives are helping consumers, but stubbornly high interest rates and tighter credit conditions continue to make affordability challenging. If we are going to see the market live up to its potential, we will need to see rates lower, and credit loosen.”

Erin Keating, Cox Automotive Executive Analyst

Bottom line: New car prices are normalizing but at a reduced pace from earlier in the year. This coupled with high auto loan rates and insurance costs are forcing consumers to either wait out the market’s headwinds or hunt for good deals.

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