The average new vehicle transaction price has soared over the past few years, though it fell slightly in February to “just” $44,045. J.D. Power’s February 2024 U.S. Automotive Forecast noted that the decline in average pricing has led to an increase in the number of transactions, pushing spending to record levels.
While the average asking price is frustrating – and a little depressing – it’s a significant step down from the numbers we saw at the end of 2023. New car buyers were paying an average of $48,759 in December 2023, and that was even with a coinciding boost in manufacturer incentives and discounts.
Despite the still-elevated transaction prices, dealer profit actually fell last month by 31.3 percent. J.D. Power pointed to increased inventory levels and a reduction in the number of vehicles selling above MSRP. Many dealers had been marking up in-demand vehicles as supply chain disruptions and production delays made some models extremely hard to find.
The good news – for dealers, at least – is that new car sales are expected to climb this month. J.D. Power projects sales of 981,000 units, a 3.8 percent increase over February 2023. Without adjusting for the number of sales days (Sundays, leap year, etc.), that jumps to 8.1 percent over last year. That would equate to consumer spending of almost $40.8 billion this month, making it the highest February on record.
Things should continue to improve for buyers. Inventory levels continue to rise, making it easier to find the right vehicle and less likely that it will be marked up. Additionally, automakers are boosting the incentives they offer, with an expected $66 increase over last month. Monthly loan payments are also calming down, remaining flat at $722 from last month.
J.D. Power also noted that used car prices are falling, down $700 to $28,121. While that’s good news for buyers, trade-in values fell even harder as a result. They dropped by $992 since February 2023 to an average of $7,912.
