Earlier this week, we talked about car payments and how they seem to be ballooning out of control. We now have a clear picture of average sales amount numbers, and the situation doesn’t look much rosier. Kelley Blue Book (KBB) recently released data showing that the average new car price in the U.S. rose by five percent in 2022.
Americans are paying $49,507 for new cars on average. However, as KBB points out, inventory shortages are not entirely to blame. New car supplies are slowly recovering, so the increase in car purchase amounts is due primarily to buyers seeking more expensive models. A side effect is that it pushes automakers to build more expensive vehicles, further exacerbating the problem.
Incentives are also recovering, as automakers offer lease, purchase, and cash-back deals to attract buyers skeptical of higher interest rates. KBB found that EV and luxury vehicle incentives rose to nearly six percent of their average transaction price. That’s shy of the pre-pandemic average of 10.9 percent, but deal offerings cratered in 2020 and 2021.
Looking only at mainstream, non-luxury vehicles, buyers paid an average of $45,578, and as KBB notes, many non-luxury brand prices were steady or fell slightly in December 2022. At the same time, Kia and Hyundai both sold cars for more than five percent over sticker. Trucks also showed price growth, with a $59,000 average sales price.
Luxury prices ended 2022 on a hot streak. The segment closed December with a $66,660 average transaction price, lower than November’s average but still elevated. Surprisingly, luxury vehicles accounted for nearly 19 percent of all vehicles purchased in December.
Promisingly, KBB found that EV prices are falling. The average price in December declined by $3,594, but the average EV sales price was massive, at $61,448. Tesla played a significant role in the drop, offering rare discounts of up to $7,500 in December.
How to get the best new car price
Before heading to the dealership, you must do your homework. Make sure you understand the type of vehicle you’re looking for and have questions about specific models. It’s a good idea to review prices and values so that you can quickly evaluate any deal in front of you. It’s also good to check your credit score to determine the best way to finance your new ride.
Keep your emotions in check during the purchase process. New cars are exciting, and the dealer may seem like your friend, but car buying is a business transaction. Don’t get caught up discussing monthly payments and add-ons, and be focused on the final purchase price you want to pay.
You can negotiate your trade-in price and other costs, but many dealers are holding firm at or above MSRP these days. You may not get the below-sticker price you’ve been used to seeing in years past, so it’s best not to waltz into a dealer thinking you’re going to bully your way into a good deal.
Finally, don’t be afraid to look outside your home area. Many dealers offer shipping and remote purchasing, so you might be able to find the car you want for a better price without leaving the couch. You’ll have to factor in shipping and any other costs to get the vehicle to your door, but you may avoid markups and other challenges buying locally.