Buyers are shopping for cheaper cars. New-car prices are still near a record.
Car shoppers are heading downmarket. At the same time, new car prices are just $52 away from a record high.
New-car prices have reached a near-record high, with the average transaction price sitting at $50,562, just $52 short of a potential all-time record. Despite this, buyers are increasingly opting for smaller, more affordable vehicles in response to rising gas and vehicle prices. According to Cox Automotive's September figures, compact car prices surged 3.2% year-over-year, reaching $27,977, while subcompact SUVs rose 1.5% to $31,213.
Four of the five most popular new-vehicle segments saw price increases above the industry average. However, compact SUV prices saw a slight decline of 0.4%, at $37,614. The data reveals a disconnect between consumer preferences and the current high prices, with buyers willing to try out new brands and switch vehicle types to manage their finances.
Inflation is currently far below the national average, at 3.7% in September, but vehicle prices are still far below historical norms. The industry is still grappling with a large inventory of next-model-year vehicles, which make up 22.4% of available stock as of September, a significant increase from 12.4% in August. Cox Automotive predicts that average new-car transaction prices could continue to rise through the next three months, with incentives potentially offered by dealers to clear out slower-selling, larger, and less fuel-efficient vehicles.
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