Cars are selling below sticker price for the first time in a while — and it's a sign car buying is finally getting better
- New car prices have been trending downward overall for months now.
- March was the first time in months car buyers didn't shell out more than a vehicle was listed for.
New cars are selling below sticker price for the first time in years — signaling that car buying might be finally getting better for the average consumer.
The average amount that Americans spent on a new vehicle in March was $48,008, according to Kelley Blue Book — or $171 below an average sticker price of $48,179 (including luxury and non-luxury cars). For comparison, just a year earlier, consumers were paying on average nearly $1,000 more than the sticker price for a new car.
That marks the first time in 20 months that car buyers didn't have to shell out more than a vehicle was listed for due to high markups on dealer lots.
Brands like Chevrolet, Chrysler, Dodge, Ford, Hyundai, and more saw the average prices paid for their vehicles decline up to 3.8% in March, according to Kelley Blue Book, indicating incentives are also creeping back. Exceptions include Honda and Kia vehicles, which continue to sell for between 3 and 6% over sticker price in the non-luxury market.
In addition to the newfound difference in sticker price versus the price actually paid, new car prices have been trending downward overall for months now. March's average price paid is down from February's $48,558, January's $49,388, and December's $49,507.
It's good news for car buyers who have encountered high prices and low inventory at dealerships since the start of the pandemic.
"We've been anticipating transaction price declines, as inventory has been steadily improving and choice has expanded," Rebecca Rydzewski, research manager of economic and industry insights for Cox Automotive, said in a release. "More vehicles on dealer lots — and on their competitors' lots — means dealers simply don't have the pricing power they did six months ago."
What car shoppers should look for
Shoppers still need to remain vigilant and keep an eye on car-buying market dynamics.
Used vehicles are a slightly different story. While the number of used cars going for more than they would new has declined, and prices overall are 8% cheaper than their new equivalent, several used models are still priced high. Unpredictable resale values and the number of cars actually making their way to the used car market right now mean supply-and-demand dynamics can be tricky to navigate.
Meanwhile, loan payments, interest rates, and inventory issues continue to hobble the industry, but customers can still find good deals and cars under $15,000.