The average American new car buyer paid $48,528 in May — $251 more than in April. The negligible increase means prices are holding close to flat, and are still under sticker price.
Prices are still higher – $1,393 beyond what they were a year ago, according to Kelley Blue Book parent company Cox Automotive. The year-over-year increase in May of 3% was the smallest in 2023; in May 2022, new vehicle prices were up 13.5% year over year.
Related: It Got Easier to Afford a New Car in April
More Americans are buying new cars as the good news spreads. Sales volumes in May were up month over month by 0.7% and up 22.1% year over year, higher than most forecasts (though the figure was fed in part by a healthy dose of fleet deliveries).
With more shoppers in the market, automakers are starting to compete for their attention with discounts. Incentives made up almost 4% of the average sale, bringing prices down by an average of $1,914.
“The modest new-vehicle price increase in May was offset by increased incentives, so many buyers were able to find deals below sticker,” said Rebecca Rydzewski, research manager of Economic and Industry Insights for Cox Automotive. “This is good news for consumers as manufacturers are seeing higher inventory and increased competition and need to push sales to keep inventory moving.”
Affordable Cars Saw Modest Price Increases
Non-luxury car prices increased an average of $158, finishing the month at $44,960. That’s $402 under the average sticker price.
But prices vary by manufacturer. Most automakers sold cars for under sticker price. But Ford and Kia showed the most price strength in the non-luxury market, selling the average vehicle at more than 3% over sticker price in May.
Luxury Car Prices Also Rose Slightly
The average luxury vehicle sold for $64,396 in May – just $239 more than in April.
But Americans continue to buy more luxury vehicles than the historical norm. Luxury vehicles made up 18.4% of all car sales last month – higher than traditional numbers but below February’s peak of 19.5%.
Electric Cars Down More Than $9,000 on Average
But the most dramatic price change remains that of electric vehicles (EVs). EV prices were essentially unchanged from April to May, with the average buyer paying $55,488. That’s $9,370 lower than last May.
“When it comes to EVs, automakers are trying to find a balance between pricing and profitability,” said Michelle Krebs, executive analyst at Cox Automotive. “EV sales in May are estimated to have increased by 4.7% compared to April and are up 44% year over year. This may be due to a combination of tax credits and manufacturer incentives that are encouraging sales.”
