How car prices avoided jumping in the U.S.

Summitric

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September 29, 2023 by Adam Malik

How car prices avoided jumping in the U.S.​

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New vehicle prices were mostly flat overall year-over-year as increases and cuts balanced each other out.

Kelley Blue Book noted that the average transaction price for a new vehicle in August was up only $42 compared to the same time last year to $48,451.

The group credited higher inventory levels and increased incentives holding year-over-year price gains in check.

Luxury vehicle prices dropped 3.3 per cent thanks to big cuts made by Tesla. The EV automaker dropped prices upwards of 20 per cent from $65,688 to $53,376 on average.

Incentives for EVs in August made up 8.1 per cent of average transaction prices.

“After a tumultuous last few years in the automotive marketplace, now we are seeing new-vehicle pricing trends hold steady,” said Rebecca Rydzewski, research manager at Cox Automotive. “Dealers and automakers are feeling price pressure, and with high auto loan rates and growing inventory levels, new-vehicle prices seem to have hit a ceiling, at least for now.”

The Q3 2023 Cox Automotive Dealers Sentiment Index, franchised automobile dealers have declining expectations for EV sales in the coming months.

“Dealers are realizing this is not going to be an easy road in the short term, especially for some brands. However, the pressure dealers feel is from over-supply rather than a lack of demand. I see this as a natural speed bump and an expected part of growth,” said Cox Automotive chief economist Jonathan Smoke. “The No. 1 issue for consumers is price, and that’s a barrier even to considering an electric vehicle. As an economist, I can confidently predict that surplus inventory and increased competition will eventually drive down prices, which will help with EV consideration and adoption.”
 

Bnorth

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Average transaction of $48,451 USD = ~$62,986 CAD or about the same as median after tax income for a Canadian family ($68,400). So people are blowing their entire earnings on a car. Financially illiterate.
 

jhurkot

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Average transaction of $48,451 USD = ~$62,986 CAD or about the same as median after tax income for a Canadian family ($68,400). So people are blowing their entire earnings on a car. Financially illiterate.

I don’t think it’s the people’s fault that every single thing you buy has gone up while wages have stayed flat. I’m not even sure what the interest rate is on a used car right now but wouldn’t be surprised if it was 8-10%.


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Caper11

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I don’t think it’s the people’s fault that every single thing you buy has gone up while wages have stayed flat. I’m not even sure what the interest rate is on a used car right now but wouldn’t be surprised if it was 8-10%.


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Interest rate is 0 to 8 % dependingon model or brand


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Frosty19

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Interest rate is 0 to 8 % dependingon model or brand


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Maybe for new, nobody in their right mind would finance a used vehicle for 0%
Another issue is letting people finance a vehicle over 7+ years.
 
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Bnorth

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7-10% with decent credit on a used vehicle depending on length of term.
 

Caper11

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Maybe for new, nobody in their right mind would finance a used vehicle for 0%
Another issue is letting people finance a vehicle over 7+ years.

I know of a person that got a used f-150 at a ford dealer with low KM for 0%, not common thats for sure, but that why I added to my comment.


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Frosty19

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I know of a person that got a used f-150 at a ford dealer with low KM for 0%, not common thats for sure, but that why I added to my comment.


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Nice score, but I stand by my comment of nobody in their right mind would offer that on a used truck with the market as it is 😅
Dealership must not like money
 
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