New car prices reached record highs in recent years as automakers struggled with pandemic-related delays and vehicle shortages. That has made car shopping a frustrating experience for millions of people, but J.D. Power’s recent sales forecast suggests that the situation is improving. The organization’s research showed that the average new-vehicle retail transaction price has fallen compared to a year ago.
In June 2023, the average new car buyer paid $46,229, but that price declined to $44,857 in June 2024, a 3% drop. That change is expected to result in many new retail sales this month, with buyers projected to drop almost $44.6 billion on cars. While that’s still 6.5 percent lower than a year ago, it would make June 2024 the fourth highest on record.
The price drops are due in part to rising inventory levels. As more cars reach dealers’ lots, manufacturers are becoming more generous with incentives, including promotional financing interest rates and cash back. Automakers’ incentive spending per vehicle has increased more than 50% from a year ago, though J.D. Power notes that higher sales volumes would offset the additional costs for OEMs. Lease deals are a significant contributor to incentive spending, accounting for almost 23 percent of new retail sales.
More inventory also means that buyers have an easier time finding the vehicle they want without waiting or long-distance searches. Fewer vehicles are being pre-sold, and new cars are expected to sit on dealer lots for an average of 45 days, a 17-day increase from June 2023.
While this is good news for dealers, buyers, and automakers, the situation hasn’t been stress-free. A recent cyberattack on CDK Global’s Dealer Management System affected thousands of dealers nationwide. While hand-written deals are still happening, the outage has slowed the sales process and complicated communications between dealers and buyers. Worse, it’s expected to extend through the July 4 holiday weekend, a major promotional time for the auto industry.