March new vehicle average transaction prices in the United States slipped 1% from February and were also lower year-over-year by 2.7%, according to Kelley Blue Book. When calculating the average from December 2022, a peak period, prices are now down 5.4%.
Still, while the U.S. new vehicle average transaction price in March was lower (at $47,218), it was also 15.5% higher than March 2021. KBB said the supply recovery was “the most important contributor” to recent sales results, compared to 2023. New vehicle inventory was nearly 2.74 million units at the start of March 2024 — up 52% YOY, while the seasonally adjusted annual rate of sales was 15.5 million.
“A healthy 15.5 million new car SAAR is welcome as consumers enjoy lower prices thanks to significant supply recovery and a doubling of incentive spend compared to last March,” said Erin Keating, Executive Analyst for Cox Automotive.
However, Keating added that historically high interest rates and associated inflation, paired with a growing deficit of available vehicles at lower price points, “will continue to challenge affordability for most car buyers.”
In its news release, KBB said higher incentives are holding new vehicle prices down. The OEM average incentive spend was up 11% to $3,121 — which was up 102% YOY. Incentives as a percentage of the average transaction price reached the highest level since May 2021, rising 6.6% (up from 5.9% in February.)
It is also more than double the average of 3.2% from March 2023. And yet, KBB noted that the industry’s vehicle combination and focus on luxury makes it difficult for the average consumer to afford a new vehicle.
Finally, the price for an electric vehicle increased in March. “After a quarter of overall EV prices being pulled down by Tesla’s price cuts, the market’s general EV price increased this month, partly due to increased prices for the Tesla Model 3,” said KBB.
