Vehicle prices increased by 1.3% year-on-year in the month of December.
In the final month of 2024, the automotive market witnessed a series of interesting developments. The average purchase price of a new car in December approached the all-time record set at the end of 2022, with the average transaction price reaching $49,740 - a 1.5% increase compared to November 2024.
Interestingly, while the overall market saw an increase, several brands reported decreased average transaction prices. Buick, Volkswagen, Mitsubishi, as well as Chrysler, Dodge, Jeep, and Ram from Stellantis, all posted lower prices compared to a year ago.
The rise in consumer sentiment and confidence played a significant role in the sales of luxury vehicles. Erin Keating, an executive analyst at Cox Automotive, stated that consumer optimism benefits sales of luxury vehicles. In December 2024, luxury models selling for over $80,000 represented 5.6% of total new car sales.
Lower interest rates toward the end of 2024, combined with incentives, contributed to higher sales volumes and average transaction prices. Incentive packages in December 2024 were substantial, with entry-level luxury cars offering incentives as high as 10% of a vehicle's purchase price.
The average incentive package in December 2024 was $3,958, a 44% increase from December 2023. This figure represents a 1.3% year-over-year increase. However, average EV purchase incentives slightly decreased, with a rate of 14.3% in December 2024, down from November's rate of 14.7%.
Electric vehicles also sold well in December 2024, with an average transaction price of $55,544, a slight increase from December 2023. Despite the slight increase, the sales of electric vehicles continued to grow, reflecting the increasing popularity of electric vehicles among consumers.
In conclusion, December 2024 saw a mixed picture in the automotive market. While the overall average transaction price approached record levels, several brands reported decreased average prices. The rise in consumer sentiment and confidence, combined with lower interest rates and incentives, boosted sales of luxury vehicles. The increasing popularity of electric vehicles also continued to be evident.
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