- Transaction prices at lowest since point since December 2022.
- Prices are still much higher than they were in March 2021.
- EV prices rose in March when Tesla raised the price of the facelifted Model 3.
The scars from all that pandemic-era price gouging are healing up and we’re getting back to a level market where Americans can buy a new car without feeling like they’re being scammed. The latest sales data shows that new-car transaction prices are at the their lowest level for almost two years.
Figures from Kelley Blue Book reveal that the average new car costs its buyer $47,218, down 1 percent on the same period last year – despite strong inflation in the early part of 2023 – and down 5.4 percent on the market’s high point in December 2022. They are, however, still a hefty 15.5 percent higher than they were in March 2021.
Related: New Cars Are The Most Affordable They’ve Been Since 2021 But Not By Much
EV prices have dropped even more sharply, the average transaction price for a new electric vehicle decreasing by 9 percent in Q1 of this year compared to Q1, 2023. Much of that drop can be attributed to Tesla’s price cuts, which account for one quarter of all EV prices, but increased prices for the recently facelifted Tesla Model 3 were also responsible for a small rise in EV transaction prices from $53,707 to $54,021 between February and March.
KBB noted that while overall transaction prices for new cars had dropped, buyers had fewer genuinely affordable vehicle options than ever before. It found that of the 275 vehicles available this past March, only eight had average transaction prices below $25,000, and just two came in under $20,000, one being the Mitsubishi Mirage (pictured below). Contrast that with the same month in 2021 when buyers could choose from more than 20 vehicles with sub-$25k transaction prices and seven that they could take home without spending more than $20k.
Buyers at the other end of the market, however, are spoiled for choice. Even excluding Ferrari, Lamborghini, Rolls Royce and other exotic brands, KBB counted 30 different vehicles with an average transaction price of more than $100,000. And there was no shortage of buyers with the cash to take them home. The study found that more than 81,000 cars sold in March with transaction prices above $75,000, compared with 52,000 units of sub-$25k metal.
Analysts at Cox Automotive think car sales in 2024 are on track to be the highest since 2019, but cautioned that a perfect storm of high interest rates and the dwindling supply of low-cost vehicles “will continue to challenge affordability for most car buyers.”