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Kelley Blue Book Report on Vehicle Prices

In October, the automotive market witnessed a modest decline in the average transaction price (ATP) for new vehicles in the United States. According to the latest estimates released by Kelley Blue Book, a leading automotive valuation company, the average ATP fell slightly to $49,766, marking a decrease of 0.4% from the previous month’s record high. However, compared to the same month last year, prices still reflect a notable increase of 2.1%. This adjustment in pricing comes after a rise in the average suggested retail price (MSRP) for new vehicles, which was recorded at $51,841—down from the historic peak in September, yet up by 2.6% from the year prior.

The decline in average prices was anticipated amid a significant decrease in sales of higher-priced electric vehicles (EVs) following the expiration of government-backed sales incentives at the end of September. Full-size pickup trucks have notably become a strong segment, showing record average transaction prices in October of $66,462 alongside a higher incentive percentage of 8.4% of ATP. The MSRP for these vehicles also remains elevated at $70,351.

As consumer purchasing patterns shift amidst affordability challenges, automakers are adapting by modifying their product offerings and utilizing incentive strategies. Erin Keating, Executive Analyst at Cox Automotive, emphasized that while prices have decreased, they are still high compared to the previous year. The ongoing demand from affluent consumers indicates resilience in the market, although a slowdown has been anticipated, indicating a trend of moderation rather than a retreat.

Electric Vehicle Market Impact

Sales of electric vehicles plunged significantly in October, attributed to the removal of incentives previously supported by the federal Inflation Reduction Act (IRA). The total number of EVs sold fell to 74,835, representing a staggering decline of 48.9% from September and a drop of 30.3% when compared to October 2024. Despite the drop in sales volume, prices for new EVs experienced a slight uptick, with October ATPs reaching $59,125—an increase of 1.6% month-over-month.

Tesla, the leading player in the EV market, reported a month-over-month price decrease of 1.1%, with an ATP of $53,526. However, the long-term trajectory reflects a decline of 5.5% compared to the same time last year. Model 3 and Model Y, Tesla's core products, both also saw reduced prices and declining sales, contributing to an overall contraction in the EV segment.

Stephanie Valdez Streaty, Senior Analyst at Cox Automotive, highlighted that the absence of financial incentives has gravely impacted the lower-cost EV market, pushing consumers towards higher-priced options which contributed to driving up the average ATP above the industry average.

Conclusion

The October report from Kelley Blue Book offers a glimpse into the prevailing conditions within the automotive market, showcasing a complex interplay between pricing, demand, and sales trends, particularly in the EV sector. As consumer behavior shifts and manufacturers respond, the data underscores the need for more affordable electric vehicle options to stimulate market growth and drive accessibility for a broader range of buyers. With Kelley Blue Book's established background in automotive valuation and market trends, stakeholders are equipped with meaningful insights to navigate these changes effectively.