Home » Car Prices Are Down Year-Over-Year For The First Time In A Decade: Report

Car Prices Are Down Year-Over-Year For The First Time In A Decade: Report

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As more data pours in we’re getting a clearer picture of what the car market looks like going into the winter and the news continues to be better for consumers, including a run of average transaction price drops, which hasn’t been seen for a long, long time.

The larger economic picture is coming into view as data on inflation, incentives, and car prices all interact to create a slightly rosier picture for consumers and a slightly dimmer outlook for dealers.

Vidframe Min Top
Vidframe Min Bottom

On the topic of dim outlooks, Renault continues to offload Nissan shares and not at a huge gain. The UAW is also filing unfair labor charges against certain non-UAW manufacturers as it becomes increasingly clear that it’s going to be a fight.

And, finally, Our Next Energy battery swaps it’s CEO.

ATP Is Down, Down, Down

November 2023 Incentives Chart
Photo: Cox Automotive

For the third month in a row, the U.S. new-vehicle average transaction price (ATP) dropped year-over-year. That’s not usually what happens. While ATP–the amount someone paid as opposed to MSRP or listed price–fluctuates from month-to-month it pretty much always goes up year-over-year. While prices were up slightly over October of this year, November marked the third month that y-o-y prices dropped, reaching $48,247, or down 1.5% over last November according to Cox Automotive.

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This is the nature of inflation and, in particular, the nature of car prices. While certain goods can drop in price as the cost of making them goes down and competition enters the market (think about TVs), the high barrier to making cars and the desire among consumers to change everything every year means that prices generally go up.

It wasn’t always this way. Prices for the Model T, famously, peaked around 1912 and dropped every year until it got as low as $290 in the 1920s. A lot of people probably deserve credit for the innovation of changing car designs and adding features on an annual basis, but Harley Earl and Alfred Sloan at GM really turned it into an art form in the post-war 1950s. Just look at a 1955, 1956, and 1957 Chevy Bel-Air.

Curiously, pretty much every automaker playing in the American market has followed this strategy. The exception? Tesla. People complain (I complain) about the lack of new designs and major refreshes, but the cars are getting cheaper.

In fact, with the Model Y being possibly the best-selling non-truck this year, the fact that Tesla Motors saw a 20.5% decrease in prices year-over-year is a big part of this (by comparison, Dodge prices were up 11.2% year-over-year and Ram prices were up 10.5%).

Incentives are also up year-over-year, unsurprisingly. The graph above, which charts incentives as a percentage of ATP v. ATP, clearly shows how much the market has shifted now that inventory is up.

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Unfortunately for dealers and consumers, the increase in inventory comes at a time when interest rates are up. From the Cox Automotive analysis:

“While consumers may feel some relief in vehicle prices and incentives as we close out 2023, automakers and dealers are feeling the results of the downward price pressure,” said Rebecca Rydzewski, research manager at Cox Automotive. “The latest dealer sentiment survey by Cox Automotive clearly indicates that dealers are seeing profits contract as inventory levels return to normal, and incentives are turned up to help stimulate sales.”

The Pandemic was a wild time where many dealers did better because of scarcity and easy credit. That scarcity is gone and interest rates being higher means that, to get a sale, dealers and automakers are having to find ways to cut prices to keep monthly payments down.

We got new numbers on inflation and they’re kinda mid, showing that inflation remains, albeit not at the level of the immediate post-pandemic period. It seems unlikely there’s going to be an interest rate cut this Wednesday from the Federal Reserve but, at least, maybe rates will hold.

Renault Takes $1.6 Billion Loss On Nissan Stake

Ghosntime
Photo: Nissan

The long and partial unwinding of the Nissan and Renault partnership post-Carlos Ghosn continues, with Renault selling its first bit of the company. Right now Renault owns about 43% of Nissan and will, eventually, only own 15% at the end of it all.

According to Reuters, this first tranche of sales means that Renault will lose about $1.62 billion relative to the initial purchase price.

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That’s bad news for Renault, though there are probably some tax advantages for the company. It’s better news for Nissan, which will be buying back 5% of its company (Nissan gets the first shot at them) at a lower price.

UAW Files Charges Against Hyundai, Honda, And Volkswagen

Uaw Striking Workers
Photo: UAW

One of the first actions in the United Auto Workers playbook is to file unfair labor practice charges against an automaker, which is why the UAW did with GM and Stellantis this summer. Can you guess who is next?

From CNBC:

UAW alleges management at three facilities — for Honda in Greensburg, Indiana; Hyundai in Montgomery, Alabama; and Volkswagen in Chattanooga, Tennessee — have participated in illegal “union-busting as workers organize to join the UAW.”

Hyundai and Honda refuted the allegations. Volkswagen said it takes such “claims like this very seriously and will investigate accordingly.”

The union alleges the activities range from surveillance of workers at Honda to confiscating, destroying, and prohibiting “pro-union materials in non-work areas during non-work times” at Hyundai.

This isn’t to say that none of this stuff happened, it’s just that it tracks with previous instances. The UAW says it’ll go public when a plant hits 30% of the membership signing a union card, at 50% you get a visit from Shawn Fain for a rally, at 60% it’s a pizza party, and 70% the UAW demands recognition or will call for a vote.

I may have made one of those up.

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Our Next Energy Gets A New CEO

Our Next Energy Techs

In spite of what’s going in with EV demand in the United States, there are still a lot of companies actively invested in the future of batteries. One of those companies I tend to keep a close eye on (I know some people over there) is Our Next Energy (ONE), which has taken a lot of money from BMW.

The company clearly wants to become the American equivalent of a CATL or an SK On, though lately they’ve faced layoffs and now the company’s CEO is stepping aside to become CTO.

Per The Detroit News:

Paul Humphries, a ONE board member with more than 40 years of manufacturing and operations experience, is the company’s new leader. Mujeeb Ijaz, who had been CEO since he founded ONE, will become vice chair of the company board and will lead product engineering as the chief technology officer.

[…]

In a statement, Ijaz said: “Change is necessary for growth, and we believe this is our opportunity and the time for growth.”

Ijaz is an engineer by training, not necessarily a business leader, so it’ll be interesting to see how the addition of Humphries helps the company as it transitions into becoming a large scale battery manufacturer.

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The Big Question

Will average transaction price go up or down in December? Place your bets now.

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Stef Schrader
Stef Schrader
4 months ago

Will average transaction price go up or down in December? Place your bets now.

I have to wait to buy a Cayenne! Sorry. It’ll be a while.

So, fall baby, FALL. Stef wants her some depreciation.

Vic Vinegar
Vic Vinegar
4 months ago

Since I am eyeing a Toyota, I’d just be happy if inventory improves and that keeps dealers honest and consumers less reliant on their horrible allocation system.

Their allocation system gives me no confidence. I’m going to put down a deposit and trust a dealer to follow through on something? Come on.

For the record, I have no issue ordering a car and waiting. I don’t need it on the lot today. But Toyota (and Honda) don’t offer you that. It is “you might have settle for a white one instead of blue in 3 months when an allocation in Limited trim comes in”. Oh boy, what excitement to look forward to. Waiting and not getting what I actually want.

If I could down to the local Toyota dealer and order a car to spec, I probably would have done that by now as long as they honored the sticker price.

Joon Choi
Joon Choi
4 months ago

All the dealerships can get f’d. Greedy bastards.

JugdishVandelay
JugdishVandelay
4 months ago

i think i speak for everyone when i ask: where the eff is rootwyrm??

CTSVmkeLS6
CTSVmkeLS6
4 months ago

It is nice to see a little bit more “normal“ of a pattern here. Almost pulled the trigger on a 2019 ram when the new body style came out but my cheap ass held out waiting for the market to cool off after the introduction of a new model. Enter Covid, everything went nuts. Confusing during all that! Strange times. I drove my old Sierra till somehow got $5000 off MSRP on a brand new 2022 last year, but even with excellent credit still had 5% interest. Now paid off but the Covid model was terrible for folks needing any decent car-new or used.

PL71 Enthusiast
PL71 Enthusiast
4 months ago

That graph really shows how much we got reamed in the name of profits during covid.

The exact same thing happened in the bike industry (massive price inflation, overestimation of future demand, blame being placed on parts shortages) and now it’s kind of in a crisis. Companies (including massive, well established ones) are going out of business all over the place. One company has buy one get one free $5000 mountain bikes right now.

Leighzbohns
Leighzbohns
4 months ago

but the bicycle industry is populated by people too bad at business to work in other businesses so there’s that. it’s a bloodbath

PL71 Enthusiast
PL71 Enthusiast
4 months ago
Reply to  Leighzbohns

Oh you are 100% right.

I also think there was a lot of greed. Companies buying up bike companies and distributors to make those sweet, sweet short term profits by running them into the ground.

Manwich Sandwich
Manwich Sandwich
4 months ago

Will average transaction price go up or down in December?”

My guess is down. I suspect inventory is piling up more and we should see more and more ‘cash back’ and other incentives come back.

“the fact that Tesla Motors saw a 20.5% decrease in prices year-over-year is a big part of this (by comparison, Dodge prices were up 11.2% year-over-year and Ram prices were up 10.5%)”

And as a result, Dodge and Ram dealers have way more inventory on hand and Tesla continues to have very low levels of inventory compared to the rest of the auto industry.

Stellantis seems to have a serious case of wishful thinking. They seem to want the pandemic shortage pricing to last forever.

It won’t.

BuiltMNtough
BuiltMNtough
3 months ago

Plus they’re putting out a woefully inferior products compared to other manufacturers

DadBod
DadBod
4 months ago

The annual update cycle has always seemed odd to me. I know the bicycle industry got hammered this season and many manufacturers are probably going to abandon the new-year-new-paint-job approach so they can roll inventory over.

Crank Shaft
Crank Shaft
4 months ago

ATPs will continue downward. The pendulum appears to have swung.

GreatFallsGreen
GreatFallsGreen
4 months ago

I’ve been of the thought that more “normal” buyers have been holding out where they can due to things like markups and inventory scarcity, and so it’s been those with more disposable income that have been driving up some of the ATPs as a whole. Now not only is inventory more available, but falling used car values and rising interest rates may be moving these buyers into the market now before either of those factors gets worse.

MikeInTheWoods
MikeInTheWoods
4 months ago

“claims like this very seriously and will investigate accordingly.” VW copied and pasted from their Dieselgate replies.

Fuzzyweis
Fuzzyweis
4 months ago

For some makes they’re still doing the 0% APR(pronounced “AY-PER”), especially with their Decembers to Remembers, that may be better deal if you don’t get hit too hard with fees and ceramic coating and such.

I think Ford with the Maverick and Chevy and Kia with the Trax and Seltos are starting to give some options for those on a budget, hopefully as they sell more of those average msrp will continue to go down, cause after Covid it went insane.

Ben
Ben
4 months ago
Reply to  Fuzzyweis

A reminder to read the fine print on 0% APR financing offers. They’re often mutually exclusive with some amount of cashback incentives that can be as much or more than you save with the 0% financing. Make sure you understand the implications of taking 0% and do the math to decide whether it’s worth it.

Drew
Drew
4 months ago

If the Tacoma hits the market in real numbers, the average transaction may go up. The price seems high, plus people are going to really want them. The configurator is up (sort of): https://www.toyota.com/configurator/build/step/model/year/2024/series/tacoma

Vic Vinegar
Vic Vinegar
4 months ago
Reply to  Drew

Man, $46k for a SR5 4WD. Ouch. Although unfortunately it appears the Chevy Colorado hovers around that price point too. Seems like a lot.

Drew
Drew
4 months ago
Reply to  Vic Vinegar

Yeah, I had considered getting one, but I was expecting the hybrid limited to come in a little cheaper than the non-hybrid limited appears to. And getting something more basic doesn’t seem to save enough, so I guess I don’t need a Tacoma enough to buy one.

Nsane In The MembraNe
Nsane In The MembraNe
4 months ago

It does seem like things are normalizing quite a bit. There are still markups on many of the most in demand enthusiast cars (Civic Type Rs, C8s, Dark Horses, etc.) in my area and of course it’s never going to be easy to get a CRV or RAV4 hybrid at anywhere near asking because Honda and Toyota have stupid allocation systems and artificially limit supply, thus giving their dealerships carte blanche in markup land…but we’re seeing progress pretty much everywhere else.

I also think that prices will keep going down. Manufacturers and dealerships got incredibly greedy during COVID and pushed the envelope as far as it could possibly go with price gouging and I think we more or less have reached the inflection point where most normal people just can’t afford new cars anymore. The average price being nearly $50,000 is not even remotely sustainable when the median household income is somewhere in the $60-70,000 range depending on what measure you’re looking at.

Either wages will need to come up or prices will need to come down. It’s not surprising that the companies that are offering decent cheap cars are seeing success. Hyundai and Kia certainly come to mind and as liberally as I hate on GM I’m seeing the new Buick Envista and Chevy Trax absolutely everywhere right now.

And you know what? I’m fine with that. For once GM did their homework and came up with cheap, cheerful, competent vehicles. Other manufacturers would be wise to do the same.

V10omous
V10omous
4 months ago

I certainly hope no one is paying markups on a regular ass C8 at this point.

Those are available under sticker all over the place.

Ranwhenparked
Ranwhenparked
4 months ago

Well, prices really had no other direction to go, they went completely obscene. At a 1.5% decline year over year, we’ll need a decade to get back to sanity

Drive By Commenter
Drive By Commenter
4 months ago

The cars are too darn expensive. I predict that prices will continue to fall. The dealers priced many people out during the pandemic. With interest rates as they are, a lot of people are looking at their current car and saying it’s not so bad after all. Shelling out $850 a month for 60 months suddenly seems less palatable. It’s helped by 2010’s cars being generally fairly reliable.

Parsko
Parsko
4 months ago

December, down. January, up. February, down. March, up, etc… (I am predicting an underdamped response)

Shop-Teacher
Shop-Teacher
4 months ago

Pizza party!

V10omous
V10omous
4 months ago

MSRPs will not decrease (they never do) but they will plateau. I predict most MY25 stickers will look like MY24s.

Incentives will continue to rise. Anything but the most in-demand vehicles will be available below sticker with a bit of shopping around.

Brian Ash
Brian Ash
4 months ago
Reply to  V10omous

Base MSRP won’t change and incentives increased like you said. But options and package prices could decrease next year, since inflation and supply issues impacted them more, though some of that is typical over a features life, hoping it’s more than normal, but it could help lower ATP.

V10omous
V10omous
4 months ago
Reply to  Brian Ash

Again, I’d be surprised if what’s printed on the sticker decreases at any point.

There may be rebates ties to specific options or packages; that is sometimes done. But it’s easier to keep MSRP as is and increase rebates, because those can be ended or modified at any time.

Parsko
Parsko
4 months ago
Reply to  V10omous

I agree. MSRP’s will NOT go down ever again. They will stay flat until they are able to climb again.

Goof
Goof
4 months ago
Reply to  V10omous

Agreed. The only way prices, “go down” is through entirely new PHEV and BEV models as competition in that market segment increases towards the end of the decade. So those won’t be, “lower prices” inasmuch as they’ll be “new lower-priced models.”

Ranwhenparked
Ranwhenparked
4 months ago
Reply to  V10omous

Average MSRPs might drop, if the market gets flooded with new entrants at the bottom end, but that seems unlikely – Chinese and Vietnamese manufacturers want to enter with luxury models, so it really seems like the entire industry have decided that used cars can be their sole entry level offerings

V10omous
V10omous
4 months ago
Reply to  Ranwhenparked

To be clear, what I meant was each individual MSRP will not decrease, but a broader decline could certainly take place as you lay out.

Cerberus
Cerberus
4 months ago
Reply to  V10omous

I also think we’ll start seeing a larger mix of lower end trims instead of the loaded-with-BS the dealers have been ordering in much higher percentages.

rctothefuture
rctothefuture
4 months ago

Prices will stay the same or slightly reduce at MSRP. Dealers will be cutting prices down with the amount of inventory on hand. If anything, manufacturers will reduce inventory price for the dealers allowing more head room for price cuts and getting that all important, manufacturer backed, financing done.

Goof
Goof
4 months ago

Prices should continue to trend down. ADMs are gone or disappearing, a bit of inventory glut (looking around me), a teeny bit of “gotta hit numbers”, and the reality that many of the buyers willing to pay higher prices already have.

At a macro level, things continue to slightly tilt towards the buyer’s favor. It is not 2019 for certain, but hopefully the worst is past us and things normalize going forward.

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