Are New Car Prices Dropping? Here's What We Know
Over the course of the COVID-19 pandemic, prices for consumer goods have consistently risen. Newly complicated supply lines and limited access to rare materials have pushed prices higher, particularly for new and complex products. As Slashgear has reported before, new car prices in particular have seen a nasty spike. According to data collected by Cox Automotive, the ATP, or average transaction price, for a new car has been above MSRP – that's "Manufacturer's Suggested Retail Price" for the acronym lovers out there – for over a year, rising to a record-breaking $49,501.
In good news for motorheads everywhere, that record was set in December 2022. The average price for a new car is still above sticker, but over the past few months that frankly terrifying ATP number has decreased by nearly $1,000, closing out February 2023 at $48,763.
To state the obvious,$48,763 is still serious money. However, that single giant number obscures what may be the beginning of a new and welcome trend downward in the price of new cars.
Math-fueled optimism
It may not be immediately obvious why a price correction of less than 2% might constitute good news for the motoring public. The TL;DR is that not all cars are created equal.
Even prior to the pandemic, the overall ATP of new car purchases was trending up. The consensus of experts – including Slashgear – has been that, while cars are getting more expensive, there's a meaningful difference between the average transaction and the transaction by the average customer.
In simple terms, many new cars are luxury items. Almost 20% of the car marketplace is considered "luxury" by the people who keep track of these things. Taking an average that includes the galactically overpriced absurdities at the top of the automotive market ignores the fact that no one in shouting distance of "average" is shopping for a Hennessey-branded, 1000 horsepower Ford pickup or a 3D-printed Rolls Royce.
As such, while the overall ATP of a new car is $48,763, the ATP of a non-luxury car is $44,697. Both numbers have been trending down since January. Chrysler, Dodge, Ford, GMC, Hyundai, Mazda, Subaru, and Volkswagen all reported decreasing ATPs in the first few months of 2023. Even electric car prices are sinking.
In short, car fans may finally be seeing a very welcome market correction. For the past few months at least, new car prices have begun trending toward affordable.