Average New-Car Price Falls Slightly Below Sticker Price. Very Slightly.

New-vehicle prices are still sky-high but on average, at least, they’re finally moving in a more affordable direction, as the average price paid for a new vehicle in March fell below manufacturer’s suggested retail price for the first time in 20 months, if only by a little.

That’s according to Kelly Blue Book, a Cox Automotive company. KBB says the average transaction price for a new vehicle in March was $48,008. That’s still high, but it’s $171 below the average MSRP.

High prices persist because new-vehicle supplies are still low, relative to demand, even though new-vehicle supplies have improved in 2023.

“Things have got a lot better; they’re still pretty terrible,” when it comes to supply, said Thomas King, president, Data & Analytics Division and Chief Product Officer, J.D. Power.

“It hasn’t got better enough, that these supply constraints won‘t continue,” King said at the New York Auto Forum earlier this month, a conference sponsored by J.D. Power, the National Automobile Dealers Association, and the Greater New York Automobile Dealers Association, hosts of the recent New York International Auto Show.

A shortage of computer chips heads the list of supply-chain problems in the auto industry. Inevitably, faced with waiting lists for new cars and trucks, auto manufacturers have diverted scarce computer chips to building their most expensive and most profitable vehicles.

Especially for luxury brands, scarcity means plenty of people are still paying over sticker price, King said. Before the pandemic, paying over sticker was nearly unheard-of.

“Too many really expensive vehicles are being built,” he said. “The percent paying over MSRP is still 33% — but it’s not 49%,” as in recent months, King said. There’s no way that can be sustained, unless new vehicles remain in short supply, he said.

The other side of the coin is that manufacturers have kept incentives low. In March, the average incentive was 3.2% of the average transaction price, or $1,516, KBB said. In March 2021, KBB estimates incentives averaged 8.4% of average transaction price.