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Incentives helped push non-luxury prices down in January, but it was on a case-by-case basis, says Kelley Blue Book’s Moody.

Average Transaction Price Stays High As Luxury Market Share Grows

Dealers can profit from both the sale of the car and the loan secured for the buyer.

The average new-vehicle transaction price in January inched down compared to the previous month, Kelley Blue Book says.

But luxury vehicles’ growing share of the light-vehicle market means a significant decrease in average transaction prices is unlikely to happen soon, Brian Moody, executive editor of Kelley Blue Book, tells Wards.

“There is more supply now; before, (the market) was supply-constrained,” he says. “Even so, if you consider the record high percentage of luxury buyers, those are still cars transacting at higher rates. So that will keep the average transaction price higher.”

Luxury vehicles’ market share in January hit a record 19.6% compared with 18.6% in December.

In January, the average transaction price was $49,388. That was down 0.6% ($310) compared with December but up 5.9% ($2,968) compared to January 2022.

“For dealers, that means more profit from the purchase price as well as points on the loans of higher-priced cars,” Moody says.

Incentives helped push non-luxury prices down in January, but it was on a case-by-case basis depending on the manufacturer and model, Moody says.

The average transaction price for a non-luxury vehicle was $45,344, down $271 in January compared with December.

Chevrolet, Chrysler, Dodge, Ford, Honda, Kia, Mazda and Subaru saw month-on-month ATP declines between 0.3% and 4.9%. Those declines correlated to higher incentives, says KBB. Toyota and Ram, however, transacted between 2% and 5% over sticker prices in January.

The luxury-vehicle average transaction price dropped $1,560 to $65,953. But again, the price drop was on a case-by-case basis.

Even in the luxury space, there are several luxury brands that are transacting just under MSRP while a few are transacting above MSRP,” says Moody.

Luxury cars, luxury compact SUVs and luxury mid-sized SUVs saw price declines of up to 1.4%, according to KBB. Entry-level luxury cars, high-end luxury cars and luxury fullsize SUVs saw January price increases of up to 4.8%.

Audi, BMW, Infiniti, Lincoln and Volvo sold 1% or more below MSRP in January, while Mercedes-Benz and Lexus showed the most price strength, selling up to 4.8% over MSRP.

The ATP for battery-electric vehicles in January dropped $3,363, or 5.4%, compared with $58,725 in December, says Kelley Blue Book. That was driven primarily by Tesla and Ford model price drops.

But, says Moody, new BEV models priced under $50,000 have entered the market, also helping lower the price and possibly attracting new kinds of buyers.

“When you add up lowering prices, plus two or three models entering the market under $50,000, that is going to have some impact. It indicates we might be on the way to more affordable electric cars formiddle-class families,” he says.

Buying any new car may seem to have become a luxury, but that isn’t true, Moody says. “It is a luxury to get the thing that everybody else wants,” he says.

Volume brands such as Honda, Toyota and Volkswagen offer new cars starting at under $30,000, Moody points out, just not in the most popular body styles and trim levels.

“It is not like every single car has its price arbitrarily raised. Low-priced cars are available,” he says.

Moody also expects prices in the overall market to continue benefiting from improving supply. He says shopping around could be a positive for consumers and dealers.

“Extra time spent shopping could yield deals for consumers and allow dealers to earn new customers,” says Moody.

TAGS: Retail
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