New vehicle prices stall in Sept. despite surging incentives

September new vehicle prices were higher than August but remained flat compared to last year, even as overall buying conditions continued to improve.

Driving the news: Car prices have hit a plateau, barely moving over the course of Q3 according to Cox Automotive.

• The average transaction price (ATP) for a new vehicle was $48,397 last month, 1% higher than in August but down 0.4% compared to September 2023.

• While prices appear to be trending downward, sudden increases keep resetting the industry’s progress. September’s ATP was actually $28 higher than January’s $48,369. New cars continue to cost roughly 26% more than they did in 2019.

• Electric vehicles continue to transact well above the industry-wide ATP, selling for an average of $56,351 in September. However, prices are coming down, dropping 0.9% compared to last year.

Zooming in: While prices remain high, other factors have continued to improve, enticing customers back to the dealership.

• New vehicle incentives continue to rise. At the start of Q3, the average incentive accounted for 6.4% of the ATP or $3,102. By last month, that amount had increased to 7.3% or $3,522, a difference of $420. EV incentives remain even higher, amounting to 12.3% of the segment’s ATP.

• Cheaper models continue to flood the market, giving consumers a wider array of affordable options. Sales of the Chevrolet Trax, Toyota Corolla and Hyundai Elantra, all between $25,000 and $26,000, remained strong throughout September.

• Buying conditions were also less stressful throughout Q3. CDK Global reports that low-stress trade-in and price negotiation alongside an increase in credit approvals drove ease of purchase ratings to a new record in August.

Bottom line: Even though prices remain stubbornly high, factors such as bigger incentives and a healthy mix of cheaper cars are helping to improve affordability. That seems to be translating into more sales for dealers: while Q3 volumes came in behind last year, many automakers still reported an increase in retail sales. Still, the remaining months of 2024 are clouded by uncertainty. Severe weather and anxiety over the election may be especially disruptive to this year’s trends.

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