On the heels of a report finding that car dealers are pessimistic about the current state of the industry, the numbers show a buyer’s market is emerging in the U.S.

The new-vehicle average transaction price in November was $48,247, an increase of less than 1% from the previous month and down 1.5% from a year ago, according to data released from Kelley Blue Book on Dec. 11.

Adding to dealer’s concerns are that new-vehicle sales incentives grew again, surpassing 5% of the average transaction price (ATP) for the first time since September 2021. New-vehicle sales incentives were up 136% year over year, indicating the new-vehicle market is shifting to consumers, said officials at Kelley.

Sale Price Declining

Lower ATPs for vehicle buyers continue to be the results of discounts and incentives, not lower-priced automobiles as the average price lost ground on the average manufacturer’s suggested retail price (MSRP). The average price decreased 1.5% from a year ago despite the average MSRP rising nearly 1% from last November. In the past decade, new-vehicle MSRPs have never decreased year over year.

“While consumers may feel some relief in vehicle prices and incentives as we close out 2023, automakers and dealers are feeling the results of the downward price pressure,” said Rebecca Rydzewski, research manager at Cox Automotive, in a press statement.

“The latest dealer sentiment survey by Cox Automotive clearly indicates that dealers are seeing profits contract as inventory levels return to normal, and incentives are turned up to help stimulate sales.”

Drop for Tesla, Rise for Dodge

Of the 35 brands that Kelley Blue Book included in its November analysis, 16 had year-over-year price declines in November. Those with the largest declines included:

• Tesla (-20.5%)
• Buick (-6.4%)
• Land Rover (-6.0%)
• Nissan (-5.7%)

On the other side, the largest year-over-year transaction-price increases came from Dodge (11.2%), Ram (10.5%), Audi (7.8%) and GMC (7.8%).

The sales incentive package in November came in at 5.2% of the transaction price, reaching the highest point of 2023 and more than twice the level from 12 months earlier. Incentives for luxury cars and electric vehicles were quoted above 8%; conversely, full-size SUVs, minivans and small/mid-size pickups were all below 3%.

Luxury Market Robust

The luxury vehicle market continued its historic trend of stimulating sales at the end of the year, being above 20% of the U.S. market for the first time on record, according to Kelley data. Luxury brand sales jumped 19.6% year over year, while non-luxury vehicle sales increased approximately 5.9% in November.

The average price for luxury vehicles in November was $63,235, an increase of less than 1% from October but down 7.5% from 2023, when the inventory shortage began to ease. Luxury brand incentives averaged 5.8% of ATP in November, up from 4.6% in October and 5.4% in September.

For non-luxury brands, the average price paid in November was $44,417, an increase of less than $100 from October but 0.3% lower than 12 months ago. Non-luxury incentives averaged 5%, currently seen as low by historical standards, despite being at their highest point since September 2021. For comparison, non-luxury incentive packages averaged 10.5% of ATP in November 2019.

EV Price Decline

As dealers across the U.S. have expressed their concerns about the electric vehicle (EV) market, the average price paid for a new EV increased last month to $52,345 from $51,715 in October. Incentive levels well above the industry average reached their highest point of 2023 at 8.9% of ATP; its was less than 2% a years ago.

As a result of incentives and above-average inventory levels, EV transaction prices were 8.5% higher than the industry average price of $48,247. Kelley officials noted that a year ago, the EV premium was more than 30%; now it’s less than 10%.

“In recent months, price parity between EVs and ICE has almost seemed possible,” observed Stephanie Valdez-Streaty, director of Strategic Planning at Cox Automotive. “It is a complicated measure with plenty of variables, but newer products and higher discounts have brought down average EV prices, even before potential tax incentives.”