Car Price Trends in April 2023

Categories: Updates

We Take a Look at Car Price Trends in April 2023

The old adage “April showers bring May flowers” likely has literal origins — it’s traced back to the agricultural writings of 16th-century poet and farmer Thomas Tusser. Today, the phrase is commonly used to describe the hardships that often precede the most fruitful rewards. New-car shoppers, in particular, are familiar with such “showers”: Vehicle markups, higher average prices and supply constraints have all put a damper on the shopping experience recently. But while there are still a few clouds on the horizon (elevated prices and rising auto loan rates, for example), there are also some metaphorical flowers to look forward to (rebounding incentives and inventory).

Related: Is the Inventory Shortage Coming to an End?

J.D. Power’s latest sales report estimates that the average new-vehicle transaction price reached $45,818 in March. While that’s still up 3.5% compared to March 2022, it continues the downward trend from February’s average ($46,229) and is a notable improvement from the record high $47,362 seen in December 2022.

While buying a new car is still more expensive than a year ago, finding one should be less daunting as inventory levels improve. There were more than 1.6 million new vehicles among dealers in March; that’s up from 1.5 million units in February and just over 1 million seen in March 2022. Another promising sign is that automaker incentives are starting to spring up again. According to J.D. Power, the average incentive in March was $1,558 — a 45% increase from the same time a year prior. The average incentive as a percentage of the average MSRP is estimated at 3.3%, which is up nearly 1 percentage point since March 2022.

Pickup trucks and SUVs continue their reign as the most popular vehicle types, accounting for nearly 78% of all new vehicle sales in March, J.D. Power reports. They also bring a slightly more generous average incentive of $1,627. Shoppers looking for the best deal on an SUV or pickup this month should consider one of the four options below, most of which come with above-average incentives.

So while inflation continues to march on seemingly unabated, Car Price Trends in April 2023 are mixed.

There is good news on the horizon in 2023, however. J.P. Morgan estimates that prices for both new and used vehicles are set to decrease as supply chain issues abate and inflation is poised to keep easing. Per the financial firm, new vehicle prices are slated to go down 2.5-5% while used cars may go down by 10-20%

The average transaction price (ATP) of a new vehicle in the United States declined in February 2023 to $48,763. So fluctuations are making meaningful predictions difficult.

As more EVs become available prices will slowly come down in price and as new gasoline vehicles dwindle, prices will likely go up.

More quickly than seemed possible a few months ago, sticker prices for electric vehicles are falling closer to the point where they could soon be on a par with gasoline cars.

Increased competition, government incentives and falling prices for lithium and other battery materials are making electric vehicles noticeably more affordable. The tipping point when electric vehicles become as cheap as or cheaper than cars with internal combustion engines could arrive this year for some mass market models and is already the case for some luxury vehicles.

Prices are likely to continue trending lower as Tesla, General Motors, Ford Motor and their battery suppliers ramp up new factories, reaping the cost savings that come from mass production. New electric vehicles from companies like Volkswagen, Nissan and Hyundai will add to competitive pressure.

The battery-powered version of G.M.’s Equinox crossover, for example, will start around $30,000 when it arrives this fall, the carmaker has said. That is $3,400 more than the least expensive gasoline-fueled Equinox. But factoring in government incentives, the electric Equinox should be cheaper. Like all electric vehicles, the car will need less maintenance, and the electricity to power it will cost less than the gasoline used by its combustion engine equivalent.