Car sales tumble globally despite a rise in consumer incentives

ByDr. Tim Sandle
February 14, 2024

Vehicles driving through New York. — Image © Tim Sandle.

New-vehicle average transaction price (ATP) data, relating to January 2024, has been released from Kelley Blue Book, a Cox Automotive company. The data indicates some key trends within the car sector, including an overall drop by 3.5 percent in new vehicle transaction prices (and lower 2.6 percent month over month; price declines in January accelerated compared to December).

Looking at a specific sector, the U.S., here the new-vehicle average transaction price (ATP) last month in the U.S. was $47,401. In the U.S., the average price paid for a luxury brand vehicle in January was $60,978, down from $62,834 in December and the lowest average transaction price since the summer of 2021.

Prices for non-luxury brand vehicles also decreased month over month in January. At $44,052, non-luxury vehicle prices were lower in January 2024 by 2.1 percent year over year. Incentives for non-luxury vehicles averaged 5.5%, an increase from December.

The biggest decline across the board was with electric vehicle prices. These were down 10.8 percent year over year. The average price paid for a new electric vehicle in January 2024 was $55,353, year over year.

These include prices for the Tesla Model Y, the industry’s EV volume leader, tumbling more than 21 percent in the past year, falling from nearly $63,000 in January 2023 to less than $50,000 last month.

These decreases in electric vehicle sales come at a time when, with many models, EV dealer incentives have jumped more than three-fold (across the past twelve months). Overall, new-vehicle sales incentives increased in January 2024 for the third straight month as the sales pace slowed; in the past year, incentive packages have risen from 2.8 percent of the average transaction price to 5.7 percent.

Luxury vehicles and full-size pickup trucks had some of the highest discounts in January. Conversely, incentives for small pickups, full-size SUVs and minivans were well below the industry average in January, averaging less than 3 percent of ATP.

Although there has been a decline in process sales remain relatively high. Despite lower prices, the seasonally adjusted annual rate (SAAR), or sales pace, was 15.0 million in January 2024, down from 16.1 million in December 2023 and below the 15.1 million recorded one year ago in January 2023.

Looking at the data, Erin Keating, executive analyst for Cox Automotive states: “It is common to see lower transaction prices and sales in January, as December typically is a hot month for luxury vehicle sales. However, the year-over-year new-vehicle ATP decline of 3.5% is notable. Prices have been trending downward for roughly six months now as automakers are sweetening deals to keep the sales flowing.”