Key Facts About Car Prices
Record Price Milestone
The average transaction price for a new car crossed an important milestone in September, rising above $50,000 for the first time. Buyers paid an average of $50,080 last month, setting a new record for the cost of obtaining a vehicle.
This is an impressive figure, and Kelly Blue Book noted that
prices for new cars have been steadily rising for more than a year, with the growth rate accelerating in recent months
. The average transaction price increased by 2.1% from August and by 3.6% compared to last year.
Records Continue to Be Updated
Transaction prices were not the only thing that rose – the average manufacturer’s suggested retail prices also reached a new record of $52,183. This is 4.2% higher than at this time last year.
Speculation around tax credits for electric vehicles may have stimulated the numbers, and KBB believes that 11.6% of vehicles sold last month were electric. This would also be a record, and the average transaction price for an electric vehicle was $58,124.
However, sales are likely to decline after the cancellation of clean vehicle tax credits, although automakers have introduced significant incentives on their own.
Manufacturer Incentives and Investments
KBB reported that automakers spent 7.4% of average transaction prices on incentives, which is approximately $3,700. This is the highest figure for the entire year, and it increased slightly from 7.2% in August. Both figures correspond to the 7.3% figure in September 2024.
Transaction Price Leaders
The manufacturer with the highest transaction prices last month was Tata, owner of Jaguar Land Rover, with a figure of $102,096. They were followed by Mercedes ($75,700) and BMW ($69,924).
On the other hand, the lowest average transaction price was $36,092 from Subaru. They slightly outpaced the Renault-Nissan-Mitsubishi alliance, which showed $36,547.
Market Trend Analysis
Cox Automotive executive analyst Erin Keating stated:
Prices rise over time, and today’s market certainly reminds us of that. While there are many available options, many price-oriented buyers choose to stay away or take advantage of the used car market
.
As a result, the situation
is driven by wealthy households that have access to capital, good credit rates, and support the higher-end segment of the market
.
Keating also noted that while tariffs add pressure to costs,
the pricing story in September was largely driven by a healthy combination of electric vehicles and premium-class vehicles, pushing the average transaction price for a new car into uncharted territory
.
This price increase is occurring against the backdrop of a general increase in the cost of living and inflationary pressures in the economy. Many experts predict that the trend of car price increases may continue, especially considering the growing popularity of technologically advanced electric vehicles and premium-class cars. Buyers looking for more affordable options may turn their attention to the used car market or consider models with a lower level of equipment.