The U.S. new-vehicle market sales pace slowed in January 2024, despite lower prices and higher incentives.
The new-vehicle average transaction price (ATP) last month was $47,401, down 2.6% from December 2023 and down 3.5% compared to January 2023, according to an analysis by Kelley Blue Book.
Kelley experts noted inventory levels have been increasing for the past year, shifting the market to favor buyers who are enjoying more choices, more discounts and lower prices.
As a result, year-over-year price declines accelerated in January, as dealers and automakers pulled the discount lever in an effort to maintain the new-vehicle sales pace.
15 Million Cars
The discount efforts did not spur sales as the seasonally adjusted annual rate (SAAR) was 15.0 million in January 2024, down from 16.1 million in December 2023 and below the 15.1 million recorded one year ago in January 2023.
Erin Keating, executive analyst for Cox Automotive, commented that its common to see lower transaction prices and sales in January, as December typically is a hot month for luxury vehicle sales.
“However, the year-over-year new-vehicle ATP decline of 3.5% is notable,” said Keating in a press statement. “Prices have been trending downward for roughly six months now as automakers are sweetening deals to keep the sales flowing.”
Luxury Vehicle Prices Lead Market Lower
Discounts and incentives in January averaged 5.7% of ATP, up just 0.2% in December but higher year-over-year by nearly 100%. In January 2023, when new-vehicle inventory was lower by roughly three-quarters of a million units, incentive packages averaged just 2.8% of ATP.
Luxury vehicles and full-size pickup trucks recorded the highest discounts in January. According to Kelley Blue Book’s analysis, the average price paid for a luxury brand vehicle in January was $60,978, down from $62,834 in December and the lowest average transaction price since summer 2021.
Luxury car prices in January were down 9.7% year over year; luxury compact SUVs saw price declines of 11.9% compared to January 2023. Sales incentives for luxury vehicles averaged 6.2% of ATP in January, down slightly from December but higher by 123% compared to January 2023.
Non-Luxury Sales
Incentives for small pickups, full-size SUVs and minivans were well below the industry average in January, averaging less than 3% of ATP.
Prices for non-luxury brand vehicles decreased month-over-month in January. At $44,052, non-luxury vehicle prices were lower in January 2024 by 2.1% from 2023. Incentives for non-luxury vehicles averaged 5.5%, an increase from December.
In comparison, one year ago, non-luxury incentives averaged 2.9% of ATP in January 2023.