Increasing New-Vehicle Prices in November Amid Rising Buyer Incentives
In November, the automotive market witnessed a notable rise in new-vehicle prices for the second consecutive month, according to the latest report by Kelley Blue Book. The average transaction price (ATP) for new vehicles reached $48,724, marking an increase of $699 or 1.5% compared to the same month last year and $720 higher than the revised ATP of $48,004 in October. This data suggests a significant uptick in vehicle costs, but it also highlights the growing trend of incentivized buyer offers designed to stimulate the market. The level of new-vehicle inventory began November above 3 million units for the first time since 2020, resulting in beneficial buying conditions for consumers despite the overall upward price trend.
The new-vehicle sales figures indicate a surprising boost as well, with 1.36 million units sold in November. This translates to a seasonally adjusted annual rate (SAAR) of 16.5 million, which is the strongest pace since spring 2021. According to Erin Keating, Executive Analyst at Cox Automotive, the increase in prices has been countered by higher discounts, and the atmosphere following recent national elections has contributed to rising consumer confidence and pent-up demand, both of which are essential for boosting sales.
November's average incentive spending per vehicle was 8.0% of the ATP, a slight rise from 7.8% in October. It marks the fifth month in a row that incentive spending has escalated, showing a stark difference from only 5.3% a year prior. Thus, as prices elevated, consumers are also benefiting from significant discounts, averaging more than $1,300 higher year-over-year.
In November, transaction prices peaked at the highest level this year, having risen 2.3% since January. Traditionally, vehicle transaction prices hit their annual peak in December. Late in last year, the ATP reached a record high of $49,926. According to Keating, despite the ongoing increase in prices, higher incentives and discounts contribute positively to keeping consumers engaged in the retail market.
Diving deeper into specific brands illustrates that while average new-vehicle incentives have climbed, some brands maintain lower incentive levels. Among the 14 mainstream brands, Porsche, Land Rover, Toyota, and GMC offered some of the lowest incentives, with Porsche averaging only 2.9% of transaction prices, which hovered over $115,000 last month. Conversely, 20 brands exceeded the average incentive spending, with eleven of these surpassing 10% of ATP, including Volkswagen, Ram, Audi, and Nissan.
Observing segment performance, the sector displaying the least consistent incentive strategies included High-Performance Cars, Compact Cars, and Small/Midsize Pickups. In contrast, categories such as Luxury Cars, Full-Size Pickups, and Compact SUVs experienced more generous incentives at 11.6% and 10.2% respectively. The Compact SUV segment represents nearly 20% of total new-vehicle sales in the U.S., highlighting not only its popularity but the competitive nature surrounding it, which further drives incentives upward.
Electric vehicles (EVs) have also seen considerable sales in November, prompting a discussion about evolving market trends. Preliminary estimates suggest this November's EV sales volume ranks as the second-best ever, surpassed only by last August. Average transaction prices for new EVs settled at $55,105, down 1.8% from October's adjusted price but still 3.8% lower than the previous year. Incentive spending for EVs has reached a high of 14.9% of ATP, peaking at approximately $8,200 as incentives grow substantially, indicating a favorable shift for consumers looking to purchase electric vehicles. According to Keating, 2024 promises to be a pivotal year for EVs, with more incentives enhancing affordability and market competitiveness.
In conclusion, while new-vehicle prices have increased, consumers can still find compelling offers due to growing incentives. As we advance closer to the end of the year, the automotive market hints at a positive closing, marked by both higher prices and attractive dealer offers that motivate buyers to act.
The new-vehicle sales figures indicate a surprising boost as well, with 1.36 million units sold in November. This translates to a seasonally adjusted annual rate (SAAR) of 16.5 million, which is the strongest pace since spring 2021. According to Erin Keating, Executive Analyst at Cox Automotive, the increase in prices has been countered by higher discounts, and the atmosphere following recent national elections has contributed to rising consumer confidence and pent-up demand, both of which are essential for boosting sales.
November's average incentive spending per vehicle was 8.0% of the ATP, a slight rise from 7.8% in October. It marks the fifth month in a row that incentive spending has escalated, showing a stark difference from only 5.3% a year prior. Thus, as prices elevated, consumers are also benefiting from significant discounts, averaging more than $1,300 higher year-over-year.
In November, transaction prices peaked at the highest level this year, having risen 2.3% since January. Traditionally, vehicle transaction prices hit their annual peak in December. Late in last year, the ATP reached a record high of $49,926. According to Keating, despite the ongoing increase in prices, higher incentives and discounts contribute positively to keeping consumers engaged in the retail market.
Diving deeper into specific brands illustrates that while average new-vehicle incentives have climbed, some brands maintain lower incentive levels. Among the 14 mainstream brands, Porsche, Land Rover, Toyota, and GMC offered some of the lowest incentives, with Porsche averaging only 2.9% of transaction prices, which hovered over $115,000 last month. Conversely, 20 brands exceeded the average incentive spending, with eleven of these surpassing 10% of ATP, including Volkswagen, Ram, Audi, and Nissan.
Observing segment performance, the sector displaying the least consistent incentive strategies included High-Performance Cars, Compact Cars, and Small/Midsize Pickups. In contrast, categories such as Luxury Cars, Full-Size Pickups, and Compact SUVs experienced more generous incentives at 11.6% and 10.2% respectively. The Compact SUV segment represents nearly 20% of total new-vehicle sales in the U.S., highlighting not only its popularity but the competitive nature surrounding it, which further drives incentives upward.
Electric vehicles (EVs) have also seen considerable sales in November, prompting a discussion about evolving market trends. Preliminary estimates suggest this November's EV sales volume ranks as the second-best ever, surpassed only by last August. Average transaction prices for new EVs settled at $55,105, down 1.8% from October's adjusted price but still 3.8% lower than the previous year. Incentive spending for EVs has reached a high of 14.9% of ATP, peaking at approximately $8,200 as incentives grow substantially, indicating a favorable shift for consumers looking to purchase electric vehicles. According to Keating, 2024 promises to be a pivotal year for EVs, with more incentives enhancing affordability and market competitiveness.
In conclusion, while new-vehicle prices have increased, consumers can still find compelling offers due to growing incentives. As we advance closer to the end of the year, the automotive market hints at a positive closing, marked by both higher prices and attractive dealer offers that motivate buyers to act.
Topics Auto & Transportation）
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