The average American new car buyer paid $48,808 in June. That’s about $500 more than last month. But it’s just 1.6% higher than a year ago – the smallest year-over-year price increase since the start of the COVID-19 pandemic.
New car prices are stabilizing because dealers finally have enough new cars to sell.
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“The fact that average transaction prices are up a meager 1.6% year over year in June is notable,” said Michelle Krebs, executive analyst at Cox Automotive. “A year ago, the industry was looking at transaction prices that were consistently up 10% to 12%” over year-ago levels.
“With no inventory in place, it was inflation gone wild,” Krebs said. “Now, as inventory has been consistently building and supply and demand are finding a balance, the price gains seem to be well under control. Average transaction prices are down from the start of the year. That’s good news for shoppers.”
Cox Automotive is the parent company of Kelley Blue Book.
Average Non-Luxury Car Price Essentially Flat
The average buyer paid $45,291 in June – just $17 more than in May. Non-luxury prices were up 2.5% from one year ago.
Car dealers have enough cars in stock that buyers are no longer scrambling to find any car that meets their needs. That has manufacturers and dealers offering discounts to compete for buyers. Incentives made up 4% of the average non-luxury car purchase in June – up from just 2.4% a year ago.
However, mainstream brands with particularly tight inventory don’t need discounts to get sales. In June, Toyota, Kia, and Honda offered incentives well below the industry average.
Luxury Prices Down, Driven by Tesla Price Cuts
Americans continue to buy more luxury cars than the historical norm. The luxury share of the U.S. market was 18.8% last month, up from 18.4% in May. Luxury share in the first half of 2023 peaked in January when it hit 19.1% of the market.
On average, luxury car prices are lower than one year ago by about 2%. The average luxury buyer paid $63,977 in June — up just $305 from May.
Since the start of the year, luxury prices have declined by more than 4%. Tesla, the luxury market leader, has slashed prices by more than 11% in 2023. In June, according to Kelley Blue Book estimates, the average Tesla buyer spent $55,106 for a new vehicle, down from more than $62,000 in January.
Electric Vehicle Prices Down a Shocking 20%
Those Tesla price cuts have ignited a price tag war in the electric vehicle (EV) market. Prices are falling fast.
In June, the average EV sold for $53,438 — down from a revised $54,528 in May and down from more than $61,000 in January. EV prices peaked at $66,390 in June 2022 and have fallen more than 20%.
“The steep drop in average EV prices this year, led by Tesla price cuts, has been a key driver of overall, industry-wide price moderation,” added Krebs. “A year ago, the average EV price was above the average luxury vehicle price. Today, as inventory and availability build, EV prices are moving closer to the industry average.”
They’re also easier to find. Car dealers measure their supply of new cars for sale in a metric they call “days of inventory” – how long it would take to sell out of cars at today’s sales pace if they couldn’t acquire more. At the end of June, dealers had an average 53-day supply of all vehicles but a 103-day supply of EVs.
That supply is concentrated – many dealers don’t have a single EV on the lot to sell. Those that do, however, often have more of them than their local market demands.
