Car dealerships have more inventory than they did a year ago and are able to offer customers better incentives, a new report from Cox Automotive says.
According to the report, the average incentive package in April for new vehicles was 6.3% of the average transaction price, which is up 80% from a year ago. The amount of incentives in April was down slightly from a peak of 6.6% in March, marking the first decline in incentives after months of growth.
However, incentives remain far above last year's levels because new vehicle inventory was 46% higher than a year ago.
The automotive group estimates that average new car transactions were 0.5% lower in April than a year prior. The average new car transaction last month was $48,510.
Although average transactions were slightly higher in April compared to March, industry experts believe the overall trend is positive for consumers.
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"The month-over-month increase in pricing in April is likely just a reflection of some pullback on incentives compared to the end of Q1, in March, when many automakers were pushing discounts to hit a strong finish to the quarter," said Erin Keating, executive analyst at Cox Automotive. "Still, prices are down year over year. Affordability challenges continue to lurk, and as inventory slowly builds, we can expect to see incentives slowly grow through the remainder of 2024 to help keep any sales momentum alive."
According to Kelley Blue Book, incentives can come in many different forms. Some dealers may offer rebates, while others might offer lower-interest financing. Others may include vehicle upgrades or free maintenance such as oil changes.
These categories of automobiles were the most affordable in April 2024, according to Cox:
- Subcompact Car: $24,220
- Compact Car: $26,582
- Subcompact SUV/Crossover: $29,731
- Mid-size Car: $31,949
- Compact SUV/Crossover: $36,557