In March, Cars Sold Below Sticker Price for First Time in 2 Years. Will Prices Continue to Drop? The average amount that Americans spent on a new car last month was $171 below the average sticker price.
By Madeline Garfinkle •
Opinions expressed by Entrepreneur contributors are their own.
The pandemic changed the consumer shopping experience for nearly everything, and cars were no exception. Throughout 2020 and 2021, supply chain constraints and increased demand caused an uptick in the price of vehicles, with the average cost of new cars increasing by $2,140 in 2020 and then $3,420 in 2021, according to Statista.
However, a new report found that the upward trend may finally be over.
In March, new vehicles sold below their sticker price for the first time in 20 months, according to data from Kelly Blue Book, and consumers paid an average of $171 less than the average sticker for new cars. A year ago, consumers were paying approximately $1,000 above sticker price.
"The latest transaction data from March reveals new-vehicle prices continued a downward trend through the first quarter of 2023," Rebecca Rydzewski, research manager of economic and industry insights for Cox Automotive, said in the report. "Both luxury and non-luxury prices were down month over month. We've been anticipating transaction price declines, as inventory has been steadily improving and choice has expanded."
However, while buyers of both luxury and non-luxury cars paid less on average as compared to the month prior, buyers of electric vehicles paid about $313 more in March than in February.
"March's upward movement of EV average transaction price was a bit of a surprise, since Tesla, the automaker with the largest share of EV sales, has cut prices three times in recent months," the report noted. "However, EV sales from Mercedes, Rivian, Lucid and other brands have increased at the same time, offsetting lower-priced Tesla products."
The market for electric vehicles has increased over the past decade and is expected to keep rising, according to the Bureau of Labor Statistics. In 2011, electric vehicle sales accounted for only 0.2% of the market as compared to 4.6% in 2021, per the data. The report predicts that electric vehicle sales could account for up to 40% of all car purchases in the U.S. by 2030.
Related: Tesla Reports Record Deliveries for the First Quarter of 2023 Following Price Cuts
