The final sale price of the average new car fell last month, as it usually does in January. But prices continue to inflate when compared to last year.
The average new car buyer paid $48,641 last month, down 2.2% from December’s average price. However, new car prices typically fall every January, as Americans tend to buy more luxury cars every December.
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January’s average is 1.3% higher than it was a year ago.
Discounts Shrinking
Automakers spent the back half of 2024 offering heavier discounts every month. Many were overstocked with new cars, advertising incentives to help dealerships sell down their inventory.
That problem still exists for some brands, but it has started to recede for the industry as a whole. The nationwide supply of new cars for sale fell below 3 million last month — the lowest number since October.
The average new car sold at a 7.2% discount in January, down from 8% the month before.
Luxury Car Binge Fades
Americans went on a luxury car shopping binge in December, buying a record number of cars priced over $80,000. That spree ended when the calendar changed.
Many of the top luxury brands, including Audi, BMW, Cadillac, and Lexus, posted significantly fewer sales in January compared to December, with some brands’ sales volumes lower by more than 50%.
Jeep Prices Falling Fast
In recent years, many automakers have focused their attention on wealthier, better-credit buyers, building more expensive cars and fewer affordable models.
No brand took that strategy as far as Jeep. Once known for stripped-down off-roaders, the brand tried an aggressive move toward the luxury market, introducing pricey models like the Wagoneer and Grand Wagoneer and even offering Wrangler trims with 6-figure price tags.
New leadership took over the company near the end of 2023, promising to lower prices and introduce more choices in gas, electric, and hybrid powertrains.
It’s working. Cox Automotive Executive Analyst Erin Keating explains, “Jeep brand ATPs [average transaction prices] in January were lower year over year by almost 9%, as the storied make continues to manage a perceived price challenge. In fact, Jeep ATPs in January were close to $49,000, not far from the industry average, and the lowest point in more than three years.”
Cox Automotive owns Kelley Blue Book.
EV Prices Falling Slowly
While the price of the average car rose year-over-year, the price of the average electric car fell.
The average electric vehicle (EV) buyer spent $55,614 in January, up about 1% from December but down 1.4% from last January.
The average EV cost 14.3% more than the average car last month, down from 17.4% this time last year.
That news comes despite market leader Tesla seeing its average sale price rise by 4.5%. Tesla’s influence on the EV market is sliding as its market share has fallen below 50%. The company faced a worldwide sales slump in January.
