Nature Is Healing: Most New Cars Are Now Being Purchased Under Sticker

Only 36% of buyers are paying over sticker, down from 80% last year. Buyers are paying an average of $300 below MSRP.

byChris Rosales| PUBLISHED Jan 21, 2023 12:01 PM
Nature Is Healing: Most New Cars Are Now Being Purchased Under Sticker
Chris Rosales
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The incessant hell of dealer markups is finally starting to slow down, with truly promising signs coming from dealer data. A year ago, more than 80% of new car buyers paid a markup, with an average markup of $700. Now, 36% of buyers paid a markup, with the average transaction price falling $300 below sticker. Things are falling, quick.

According to data from Edmunds, reported on CNN, even with the rapid decline of dealer markups, there’s still plenty of data to suggest that buyers aren’t slowing down and there is a long way to go before reaching pre-pandemic transaction prices, which was an average of $2,600 under MSRP. Truthfully, that may never happen again, but there are encouraging signs that cars will continue to get cheaper.

Ford

Inventory is steadily improving, especially since the beginning of 2021. Dealer lots are fuller, with the supply of new cars increasing by 800,000 from the start of 2022. That marks an 83% increase in supply, which is still 1 million vehicles under pre-pandemic levels of new vehicle inventory. Manufacturing backlogs stemming from parts shortages are the primary reason for the scarcity of new cars. If some of the evidence is to be believed, automakers are clearing their incomplete car inventories quickly.

There’s a waterfall of effects: Trade-ins and used cars are down significantly, an average of $3,000 or 11% from the stratospheric peak in June. Buyers who were driven away by low inventories into the used car market can now get back into the new car market. Also, interest rate hikes have made financing new cars more expensive than ever. 

Things are looking better, but we are far from what used to be normal. But there is now a definite trend–prices are going down, and inventory is going up. There’s only one way for that to go folks, and that is cheaper cars.

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