The final sale price of the average new car rose in November, but not because car dealers were raising prices. Americans simply chose more expensive cars last month because it’s growing easier to get significant discounts.
The average buyer paid $48,724 last month — about 1.5% higher than a year ago. However, the purchase included incentives worth 8% of the deal, up from 7.8% last month and just 5.3% a year ago.
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“The end of the year typically sees an increase in transaction prices as luxury sales pick up,” explains Cox Automotive Executive Analyst Erin Keating. “Following the national election, pent-up demand and some improvements in consumer confidence seem to be driving the market. And higher incentives are certainly helping as well.”
Cox Automotive is the parent company of Kelley Blue Book.
Incentives — those discounts automakers and dealers advertise to compete for your business — have now risen for five straight months. Automakers offer incentives when they have too many cars to sell.
Some Brands Very Willing to Discount; Others Not
Of the mainstream car brands tracked by Kelley Blue Book, 11 offered incentives worth more than 10% of the deal last month.
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Volkswagen, Ram, Audi, and Nissan were a few of the market’s most generous brands in terms of incentive spending in November. All four have more vehicles than they traditionally aim to keep in stock — a common story for automakers this season.
At the other end of the scale, Porsche, Land Rover, Toyota, and GMC offered some of the lowest incentive levels in the market. Toyota and its Lexus luxury division remain undersupplied compared to the competition.
Compact SUVs Driving The Market
Nearly one in five cars sold last month was a compact SUV — the best-selling type of new car in America. Buyers paid an average of $36,858 to take one home. They got an average 10.2% discount, up from 9.4% the month before.
Only high-end luxury cars like the BMW 7 Series and Mercedes-Benz S-Class saw bigger discounts (an average of 11.6%).
EVs The Best Deals
Initial estimates suggest that Americans bought a near-record number of electric vehicles (EVs) in November, just behind record numbers from August.
In November, Kelley Blue Book estimates show that the average transaction price for a new EV was $55,105, 3.8% lower than a year ago. Dealers discounted the average EV by 14.9% of the sale price.
The typical incentive package last month for a new EV exceeded $8,200, which includes, when applicable, point-of-sale government-backed incentives.
“We have said consistently that 2024 will be the ‘Year of More’ for electric vehicles,” added Keating. “There are certainly more incentives being offered. EVs right now are the best deals in the market.”
