The U.S. new-vehicle market experienced a slowdown in sales pace in January, despite a drop in average transaction prices (ATP) and an increase in buyer incentives, per Kelley Blue Book, a Cox Automotive company. The report indicates a significant reduction in new-vehicle ATPs at $47,401, marking a 2.6% decrease from December 2023 and a 3.5% decline compared to January of the previous year.
"It is common to see lower transaction prices and sales in January, as December typically is a hot month for luxury vehicle sales," said Erin Keating, an executive analyst for Cox Automotive. "However, the year-over-year new-vehicle ATP decline of 3.5% is notable." She added that prices have been on a downward trend for about six months, driven by automakers' efforts to enhance deals to sustain sales.
The seasonally adjusted annual rate (SAAR), an indicator of sales pace, was 15.0 million in January, a decline from 16.1 million in December 2023 and below the 15.1 million rate from January 2023. This slowdown occurred despite dealers and manufacturers increasing discounts and incentives, which averaged 5.7% of ATP in January, up from 5.5% in December and significantly higher than the 2.8% average in January 2023 when new-vehicle inventory was considerably lower.
Luxury vehicles and full-size pickup trucks saw some of the highest discounts, while incentives for small pickups, full-size SUVs and minivans remained below the industry average, at less than 3% of ATP. The luxury vehicle segment, in particular, witnessed a decrease in prices, with the average price for a luxury brand vehicle dropping to $60,978, the lowest since the summer of 2021, and year-over-year price declines in luxury cars and compact SUVs reaching 9.7% and 11.9%, respectively.
The report also highlighted the revised EV transaction price data, reflecting the ongoing downward pressure on electric vehicle prices. The average price for a new EV in January was $55,353, a 10.8% decrease year over year. Incentives for popular EV models like the VW ID.4, Nissan Leaf, Hyundai IONIQ 5 and Tesla Model Y have seen significant increases, with the Tesla Model Y's price dropping more than 21% in the past year.
