New vehicle prices decline for 10th straight month
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After years of soaring prices, the cost of a new car is falling, per a batch of fresh data out this week.
Why it matters: It's not time to celebrate yet. Prices for vehicles and insurance are still eye-popping compared to pre-pandemic days.
The big picture: Pandemic-era supply chain bottlenecks — which led to price spikes — have cleared up. Dealerships are now turning to discounts to keep sales flowing.
- Incentives like cash rebates and loan rate reductions — which practically disappeared during the pandemic — are back.
By the numbers: The price of a new vehicle fell 1% in July, compared to last year, according to Consumer Price Index data out Wednesday.
- New-vehicle prices have declined on a year-over-year basis for 10 straight months, according to Kelley Blue Book.
- The average transaction price of a new vehicle sold in July was $48,401, down from the all-time high of $49,929 in December 2022.
Plus: Incentives, which don't factor into transaction prices, averaged $3,383 per vehicle in July, up 59.1% from a year ago, according to Cox Automotive's Kelley Blue Book.
Used car prices continue to slide, as well.
- Used vehicle prices averaged $27,472 in the second quarter, down from $29,742 a year earlier, according to data released Wednesday by car research site Edmunds.
Yes, but: A rapid increase in insurance costs is happening in parallel with the cooldown in vehicle prices.
- Motor vehicle insurance prices rose 18.6% in July, compared with a year earlier, according to the CPI.
- As a general rule of thumb, insurance rates lag changes in price. Since vehicles are more expensive now than they were before the pandemic, they're more expensive to replace — and thus insurance is more costly.
Disclosure: Cox Automotive is owned by Cox Enterprises, which also owns Axios.
