Average New Car Prices Fall Below $48,000 for First Time in Year

Consumers got new vehicles for relatively cheap in September, as costs were lowered by increased incentives, Tesla's slashed price tags and high levels of inventory.

The average transaction price for a new vehicle last month was $47,899, down $360 since Sept. 2022. Since the year began, new vehicle prices have dropped by more than 3%, according to Kelley Blue Book.

Non-luxury vehicles were bought for $44,626 on average, down $82 from August, lowered by incentives of about 4.7%, up from 2.3% in the year prior. Only three types of vehicles — compact cars, subcompact cars and subcompact SUVs — sold for less than $30,000 on average in September.

The final two vehicles that can still be purchased for less than $20,000, the Mistusbi Mirage and Kia Rio, are expected to be discontinued as the industry moves away from sedans.

"After new-vehicle prices peaked at nearly $50,000 at the start of 2023, we're seeing average transaction prices dip below $48,000 for the first time in more than a year," said Rebecca Rydzewski, research manager at Cox Automotive. "Dealers and automakers are feeling price pressure, and with auto loan rates at record highs and growing inventory levels, new-vehicle prices continue to ease."

Luxury vehicles were sold for about $62,342 on average last month, down more than 6% year-over-year, primarily due to electric vehicle maker Tesla's series of price cuts, according to Kelley Blue Book. The Austin, Texas-based automaker has slashed prices on at least some of its vehicles nearly every month in 2023.

The cost of a new Tesla has fallen by nearly 25% since Sept. 2022, led by a 26% reduction in the Model 3 sedan's average price tag. Tesla's near-constant attempts to make its vehicles more attractive through price cuts have managed to offset the price gains by other luxury automakers.

Mercedes-Benz's vehicles sold for nearly $80,700 on average, up 11.5% year-over-year. The average price of Porsche and Audi's luxury vehicles climbed more than 8% compared to last September, to $121,189 and $65,671, respectively.

EV prices dropped by 22% — primarily due to Tesla's slashed prices — to $50,683, down from more than $65,000 last year. Electric vehicles also benefitted from incentives worth nearly $5,000 on average and inventory well above the industry average.

While Kelley Blue Book recorded 52 days of supply for both EVs and internal combustion engines at the beginning of the year, EV supply has drastically outpaced ICE. There were roughly 97 days of EV in stock when October began even as ICE supply hovered between just 52 and 58 days.

"At last check, we had 15 new EV models for sale that were not available a year earlier," Stephanie Valdez-Streaty, director of Industry Insights at Cox Automotive, said. "Better choices and more options are helping push prices lower and drive higher sales."