Profits Rise, But Not for Long

A pullback on incentives offers short-term relief for some dealers.

Nancy Dunham, Principal Analyst/Retail

May 17, 2024

2 Min Read
Watch manufacturers’ increased incentives during hot summer buying months.
Watch manufacturers’ increased incentives during hot summer buying months.Getty Images

Dealers are reaping the rewards of a pullback in manufacturers’ incentives – but don’t expect it to last long.

A dip in manufacturers’ incentives in April boosted average new-vehicle transaction prices (ATP), which increased month-over-month to $48,510 from $47,481, reports Kelley Blue Book (KBB), part of Cox Automotive. That 2.2% jump marked the first increase this year.

“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, in March, when many automakers were pushing discounts to hit a strong finish to the quarter,” says Erin Keating, executive analyst at Cox Automotive. “Still, prices are down year-over-year.”

Keating says ongoing affordability challenges, including high interest rates and a slow buildup of inventory at many dealerships, will prompt manufacturers to boost incentives again. April incentives were 6.3%, 80% higher than one year ago, when many dealers were scrambling for vehicles, reports KBB.

Here are some new-vehicle sales highlights from KBB:

  • The share of new-vehicle sales from luxury brands in April was 18.4%, equal to the share in March and higher than the 18.2% in April 2023. Luxury transaction prices increased 2.4% from the prior month, and incentives were notably lower at 6.0% of ATP, down from 7.4% of ATP in March. 

  • Tesla, the luxury market leader, posted larger-than-average ATP increases month-over-month in April, with a gain of 5.7% compared to March. Volvo also posted higher-than-average ATP increases last month. All other luxury makes posted month-over-month gains less than the luxury vehicle average gain of 2.4%.

  • Overall, luxury brand prices in April were 2.1% lower year-over-year, highlighting price pressure. In April 2023, the average price paid for a new luxury vehicle was a revised $65,418. Last month, luxury ATPs were $64,076. Luxury-brand incentive levels were higher year-over-year by 86%, rising from 3.6% of ATP in April 2023 to 6.0% last month.

  • After declining month-over-month in January, February and March, non-luxury vehicle prices reversed course and increased in April, rising 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% and were mostly flat year-over-year, down by only 0.2%.

  • Higher pickup truck prices helped push non-luxury vehicle prices higher. The average transaction price for a fullsize pickup truck in April, at $66,631, was higher year-over-year by 2.8%. The small and midsize pickup segment, which includes the popular new Toyota Tacoma, posted a month-over-month price increase of 3.3%. The average transaction price was just shy of $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% of ATP. However, incentives in April were 85% higher year-over-year.

About the Author(s)

Nancy Dunham

Principal Analyst/Retail, WardsAuto

Nancy Dunham became an auto journalist more than twenty years ago. She has worked as an editor and writer for the National Automobile Dealers Association, US News & World Report, CarFax, and various newspapers in Washington, D.C. and Baltimore. Her work also appears in Costco Connections, AARP, the New York Times, Rolling Stone and other publications.

Before specializing in automotive retail journalism, she was a newspaper reporter, magazine editor and publisher.

She lives in Tucson, Arizona, with her three beloved cats.

Contact her at [email protected] or

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