New-vehicle prices in November climbed higher year-over-year for the second straight month as the average transaction price (ATP) was $48,724, an increase of $699, or 1.5 percent, from November 2023, according to data from Kelley Blue Book released Dec. 11
New-vehicle inventory at the start of November was above 3 million units for the first time since 2020. Despite the higher prices, sales topped 1.36 million units and delivered a seasonally adjusted annual rate (SAAR) of sales of 16.5 million, the best sales pace since the Spring 2021.
Additionally, the November ATP was higher by $720 compared to the downwardly revised ATP in October of $48,004.
Consumer Confidence Up
Cox Automotive executive analyst Erin Keating offered that higher prices were met with higher discounts in November, which has kept the retail business moving.
“Following the national election, pent-up demand and some improvements in consumer confidence seem to be driving the market,” said Keating in a press statement with the report’s release. “And higher incentives are certainly helping as well.”
Driven By Incentives
Now increasing for five straight months, sales incentives for new vehicles in November averaged 8.0 percent of ATP, up from 7.8 percent in October. In November 2023, incentive spending was equal to 5.3 percent of ATP. Incentives last month were higher by more than 50 percent year-over-year at about $1,300, while vehicle prices increased by only 1.5 percent (approximately $700), helping improve affordability and likely boosting vehicle sales.
The ATP of $48,724 is up 2.3 percent since January. KBB analysts noted vehicle transaction prices historically typically peak in December. Last December, the Kelley Blue Book ATP estimate was $49,023, the highest ATP of 2023.
“The end of the year typically sees an increase in transaction prices, as luxury sales pick up as the year winds down,” said Keating. “If sales volumes in November are any indication, we think 2024 will end on a positive note for the auto business. Yes, prices are trending higher year over year, but higher incentives and discounts are bringing in buyers.”
New-Vehicle Incentives Vary Widely
The average new-vehicle incentives in November were equal to 8.0 percent of the ATP, but KBB report noted the amount of discounting in the market varied widely across the many brands, with a majority exceeding the industry average.
Of the mainstream brands, 14 posted incentive spending below the industry average in November, with Porsche, Land Rover, Toyota and GMC continuing to offer some of the lowest incentive levels in the market. Last month, Porsche’s incentive spending per vehicle averaged just 2.9 percent of the vehicle transaction price, which was over $115,000 last month for the German sports car brand.
Meanwhile, 20 brands had above-average incentive spending in November, with 11 of the 20 spending above 10 percent of ATP. Volkswagen, Ram, Audi and Nissan were a few of the market’s most generous brands in terms of incentive spending in November.
Breakdown By Segment
The compact SUVs segment, which accounts for nearly 1-in-5 new-vehicle sales, continues to be the most popular and competitive segment in the U.S. market. More than 20 excellent models are competing in the segment, and the average price for a new compact SUV in November was $36,858, higher year over year by one percent but lower than the industry average by more than 30 percent.
Last month, incentive spending in the compact SUV segment was 10.2 percent of ATP, a jump from 9.4 percent in October and an indication of the competitiveness of the popular compact SUV segment. Only the high-end luxury cars segment (BMW 7-Series, Mercedes S-Class, Lexus LS) had higher incentives, at 11.6 percent of ATP.
EV Overview
New electric vehicle (EV) sales were strong in November, with initial estimates suggesting sales were behind only August 2024. In November, the ATP for a new EV was $55,105, a decrease of 1.8 percent from the downwardly revised October price. EV prices last month were lower year over year by 3.8 percent.
Incentive spending on EVs jumped, reaching 14.9 percent of ATP, the highest level since the pandemic and an increase from the upwardly revised 14.6 percent in October. At 14.9 percent of ATP, the typical incentive package exceeded $8,200, which includes 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.”
