In a monthly recurring headline, the average transaction price for new vehicles in December 2022 was $49,507, up 1.9% or $927 from November.
It’s up 4.9%, or $2,297, since December 2021, according to Kelley Blue Book. The record price comes despite the fact that new vehicle inventories are growing, with some models such as the Ford Escape recording a 93-day supply and the Acura TLX recording a 70-day supply, according to Automotive News. A 60-day supply has long been considered average, but since the pandemic, that’s no longer the norm.
Consumers have been paying more than the manufacturer’s suggested retail price for more than a year. This, combined with higher lending rates, has resulted in sales volume declining from November, although volume in December 2022 increased from the same period in 2021.
Prices remain stratospheric
The average price paid for a new non-luxury vehicle in December was $45,578 – a record high. That includes the Ford F-Series, America’s best-selling vehicle, which had an average transaction price of $66,451, which is almost as much as what luxury car buyers paid.
Of course, luxury vehicle sales remained strong in December 2022, hitting a record high of 18.6% market share at an average new car transaction price of $66,660. But unlike usual vehicle prices, prices are down $216 from November. Luxury vehicles are sold below MSRP in December, especially luxury compact and sub-compact SUVs.
However, some brands have more pricing power than others – a longstanding truism in the auto trade. Mercedes-Benz and Land Rover sold 2.6% to 6.5% more than MSRP last month, while Audi, BMW, Infiniti, Lexus, Lincoln and Volvo sold 1% or more less than sticker price.
And stimulus, which is at historically low levels, is starting to rise, rising to 2.7% of the average transaction price, up from 2.2% in November. Electric vehicles in particular had the highest incentives due to Tesla, accounting for an average of 6.2% of the median transaction price, compared to luxury cars at 5.8%. Vans, minivans and full-size SUVs had the lowest incentives at less than 1 percent.
Other prices fall
But used-car prices are showing a decline in sales, according to Manheim, the auto industry’s largest used-car auction house. Overall, used car prices fell 14.9% last year despite a one-month increase of 0.8% from November to December 2022.
On average, fewer sales were completed as the bargaining power of buyers increased. In particular, Manheim reported a 2.2 percent drop in the price of three-year-old vehicles. The price of compact cars fell the most by 13.5% compared to the same period last year, followed by sports cars at 12.6%, pickups at 12.2% and vans at 12%.
Those prices reflected falling foot traffic as Dealertrack reports that used car sales fell 7% from November to December, despite dealer inventory falling to 52 days in December from 54 days in November.
If there was a bright spot for retailers, it was rental, commercial and government fleet sales, up 47% year over year in December.
And the price of gas is also falling, with the national AAA price for a gallon of regular fuel averaging $3.267 compared to $3.277 last month. The drop in premium fuel is similarly small, falling to $4,010 from $4,034 a month ago. Those who refilled diesel saw far larger savings this month, averaging $4,627 versus $4,939 last month. But if you fill up with E85, you’re out of luck. Prices rose to $2,703 from $2,677 a month ago.
Here’s the catch
But not all vehicle costs are falling.
According to a report issued by Lending Tree, insurers are expected to increase auto insurance premiums by an average of 8.4% in 2023 based on rate filings by insurers, with premiums expected to increase in 45 states. Among the states where drivers are facing the largest average increases are Illinois at 17%, followed by Arizona at 15.6% and New Hampshire at 13.6%.
And be sure to watch your speed. Getting a relocation violation increases your rate by an average of 52%, with premiums increasing by more than 100% in North Carolina and California. And while your new electric vehicle saves you fuel. Insurance costs an average of 28% more than one powered by fossil fuels.
At $3,576, the Porsche Taycan will have the highest EV insurance premiums in 2023, while the Mini Cooper Electric will have the lowest at $1,917. Overall, crossovers cost the least to insure on average, costing $1,979, followed by sedans at $2,163, pickups at $2,347, and SUVs at $2,474.
Among pickup trucks, buyers of the Ford F-150 Lightning have the lowest insurance at $2,043, followed by Ram at $2,135, F-Series at $2,330, Rivian R1T at $2,340, GMC Sierra at $2,422, and Chevrolet Silverado with $2,551.
But if you really want to save money on your auto insurance bill, the answer is to buy a Honda CR-V. At $1,900, it has the lowest average insurance rate, according to the study, although the average rate for full auto insurance in the US is $1,780 per year.