The price for new vehicles increased for the first time in 2024, according to a Kelly Blue Book (KBB) estimate released May 14.
The average transaction prices (ATPs) for April is expected to increase by 2.2 percent to $48,510, the highest price since December 2023. But that was not enough to overcome the declines the first three months of this year, as year-over-year prices are lower by 0.5 percent.
Additionally, new-vehicle incentive levels were 6.3 percent of the average transaction price in April, down from 6.6 percent in the prior month. The incentive decline was the first decrease since October 2023, when levels receded to 4.7 percent from 4.8 percent in September.
Reasons for High Prices
“The month-over-month increase in pricing in April is likely just a reflection of some pullback on incentives compared to the end of Q1…when many automakers were pushing discounts to hit a strong finish to the quarter,” said Erin Keating, executive analyst at Cox Automotive in a press statement. “Still, prices are down year-over-year.”
According to KBB officials, new-vehicle sales volume in April was lower month-over-month driven in part by fewer selling days. But at 15.7 million in April, the seasonally adjusted annual rate (SAAR) of sales was marginally higher versus March and flat compared to a year ago.
Inventory issues continue to plague dealers, but now with too many cars sitting on lots. Cox Automotive’s vAuto estimated new-vehicle inventory levels to be higher year-over-year by 46 percent and mostly unchanged from March.
Analysis opined the rapid increase in available supply has slowed and the inventory has kept downward pressure on prices that resulted in average transaction prices in April being lower.
Luxury Prices Up 2.4%
When viewing new-vehicle sales by sector, the share of new-vehicle sales from luxury brands in April was 18.4 percent, equal to the share in March and higher than the 18.2 percent in April 2023, according to KBB. Luxury transaction prices increased 2.4 percent from the prior month; incentives dropped 1.4 percent from March to 6.0 percent.
Tesla posted larger-than-average ATP increases with a gain of 5.7 percent from March to April. All other luxury makes posted month-over-month gains less than the luxury vehicle average gain of 2.4 percent.
Luxury brand prices in April were lower by 2.1 percent year over year— luxury ATPs were $64,076 last month compared to $65,418 in April 2023. Luxury brand incentive levels were higher by 86 percent from last year, rising from 3.6 percent of ATP in April 2023 to 6.0 percent last month.
In the non-luxury market, new-vehicle prices rose to $44,989 from a revised $44,078 in March. Prices of non-luxury vehicles were higher month-over-month in April by 2.1 percent and were mostly flat from a year earlier, down 0.2 percent.
2024 Expectations
Pickup trucks helped push non-luxury vehicle prices higher as the ATP for a full-size was $66,631 in April, an increase of 2.8 percent from 2023. The small and mid-size pickup segment had a month-over-month price increase of 3.3 percent with a ATP of nearly $43,000. Unlike the broader market, pickup truck prices in April were also higher year-over-=year.
In April, incentives for non-luxury brands were flat compared to March, holding steady at 6.4 percent of ATP as incentives in April were higher year-over-year by 85 percent.
As for the rest of the year, Cox’s Keating offers that “affordability challenges continue to lurk, and as inventory slowly builds, we can expect to see incentives slowly grow through the remainder of 2024 to help keep any sales momentum alive.”