New car prices rose 0.3% last month
New car prices declined for most of 2023, but rose slightly last month. An average new car buyer in the United States paid $47,936 in October, less than a third of a percent of what they paid the previous month.
It’s not a sign of things to come. Prices have fallen 1.4% since this time last year and 3.5% since their peak last December.
“New car prices in October were mostly unchanged from September,” said Rebecca Rydzewski, research director at Cox Automotive. “The only big mover last month was Tesla, which continues to change prices at a surprising pace. Tesla’s price shifts in 2023 show how dynamic pricing is with its direct-to-consumer sales model.
Cox Automotive is the parent company of Kelley Blue Book.
The slight rise in prices can be attributed in part to the effects of a strike by auto workers that has already stabilized. The strike brought big raises and better job security for members of the United Auto Workers (UAW) union, but barely lowered prices due to a unique strategy.
A cautious strike kept prices under control
The UAW struck all three major Detroit automakers at once for the first time in history. But it also adopted a gradual strategy that kept the hit small. Workers left their jobs at a few factories, adding more over time as talks continued.
By Cox Automotive inventory calculations, that strategy meant fewer cars were not built than would have been the case had the UAW conducted a traditional strike against a single automaker.
Transaction prices for some brands affected by the strike rose on a monthly basis in September. Chevrolet, Chrysler and Dodge retreated from the cuts and saw their average transaction prices rise. But the Ford, Jeep and Ram brands all received incentives, growing month over month and seeing their final selling prices decline.
The rest of the industry was not affected. Despite the longest strike in decades, most dealers have enough cars to sell.
Non-luxury prices remained steady
The average price of a new non-luxury car in October was $44,331, up less than 1% from a year ago and down $189 from revised September figures. Incentives accounted for 4.9% of average sales, rising from 2.3% last October to 4.7% one month ago.
But truly affordable cars remain the minority of sales.
Only three vehicle segments had average transaction prices below $30,000 in October — compact cars, minivans, and subcompact SUVs.
Only two models had average selling prices below $20,000 – the Kia Rio and Mitsubishi Mirage. Both cars will be retired in the coming years.
Prices of luxury products have risen
In October, new luxury car prices rose $757 compared to September, but fell 7.4% year over year to $62,903. Tesla, the luxury market leader by volume, led the monthly increase in average luxury goods prices. Last month, Tesla’s average transaction prices rose 5.2% compared to September, reflecting ten consecutive months of lower transaction prices for the electric car maker.
Despite overall higher prices, sales of luxury brands were strong in October, with luxury’s share of total sales increasing to 19.4% – a near-record figure compared to 18.6% in September.
Electric vehicle prices have risen
The average price of a new electric vehicle in October was $51,762, up from a revised $50,326 in September.
The month-over-month price increase was driven by transaction price gains with the Tesla Model 3 (up 10%) and Model Y (up 3%). Tesla has cut prices sharply several times in 2023, but may back away from that strategy under investor pressure after a tough third quarter.
Even with the gains in October, average electric vehicle prices fell by more than $13,000 year over year. Notably, the average price paid for a Tesla Model