Key facts
- Average new car price was $50,562 in September.
- Buyers are shifting to smaller vehicles and switching brands.
- Compact car prices rose 3.2% year over year.
- Next-model-year vehicles made up 22.4% of inventory in September.
Buyers are increasingly seeking more affordable vehicles, but new-car prices remain close to record highs. In September, the average new car transaction price was $50,562, a nearly 1% increase from the previous month and just $52 below a record. This price is up 0.7% from a year ago.
Shoppers are adapting by gravitating towards smaller vehicles like sedans and smaller SUVs, and are willing to switch brands to manage costs. However, prices for these smaller segments are also rising. The average price of a compact car increased by 3.2% year-over-year to $27,977, and subcompact SUVs rose 1.5% to $31,213. Only compact SUVs saw a slight price dip.
Compared to the overall inflation rate of 3.7% in September, the 1% to 2% price increase for vehicles is below historical norms. The rollout of next-model-year vehicles has been slower this year, contributing to higher prices. Dealers may begin offering incentives on slower-selling, larger vehicles to clear inventory.