Nature Is Healing: New Car Buyers Paid Less Than Sticker Price Last Month
More cars, lower trims, and higher costs for borrowing mean we’ve broken a 20-month streak for paying more than sticker.
Congratulations, people. We made it out of the upside-down. New car buyers, on average, paid less than sticker last month, ending a 20-month rout on wallets and common sense. This week, Kelley Blue Book said the average transaction price (ATP) for a new car in March was $48,008, a $550 decrease from February’s mark. ATPs were still up $1,784 over March 2022, but at least it’s not going straight to oversized rings, aftershave, or bad ads; KBB reported that the average price consumers paid was $171 below MSRP. Thank goodness.
Incentives paid by automakers rose to $1,516, the highest mark in nearly a year. All of the above are likely due to an increased supply of new cars, lower-priced models on lots, and perhaps a cooling auto market. A typical 60-month auto loan rate in March 2022 was 4.1% compared to today’s rate of 6.5%. That means shoppers have less purchasing power when financing a vehicle and likely drove down ATPs as borrowing costs have increased.
Luxury car prices haven’t changed much, according to KBB. In March, luxury buyers spent just $9 less than they did on a new car in February, clocking in at $65,202 ATP. The overall volume of luxury cars has dipped to 18.2% of the overall market, down from 19.5% in February. Luxury cars still make up a large percentage of the market; five years ago, luxury auto sales comprised just 14% of the market. KBB noted that two luxury brands—Porsche and Land Rover—now have individual ATPs of more than $100,000.
The average purchase price for an electric car rose in March compared to February. The average EV buyer paid $58,940, up $313 from February’s mark.
It’s not all beer and skittles today, however. Average incentives paid by automakers are still at historically low levels: 3.2% of ATP versus 8.4% of ATP in March 2021. And borrowing costs are significantly higher, too. Let's celebrate small wins.
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