Kelly Blue Book - Higher Car Prices, Bigger Discounts

According to Kelly Blue Book, average new-car prices climbed again in November, hitting $48,724, yet incentive spending also rose for the fifth month in a row. Consumers now face a complicated dance: more expensive vehicles, but also more substantial discounts.

The latest numbers confirm what many of us have sensed for a while: new-car prices keep edging higher, and it’s getting harder to justify jumping into a deal. According to the latest Kelley Blue Book data, the average transaction price in November hit $48,724. That’s about $720 more than in October and $699 more than this time last year. This isn’t just sticker shock; it’s proof that the industry continues to push prices upward, even as supply chains recover and dealer lots start to look a bit fuller.

There’s a twist, though. Incentives rose to 8.0% of the average transaction price, moving up from 7.8% in October. Incentive spending has been on the rise for months, which might signal that manufacturers and dealers are feeling pressure from shoppers who have had enough of relentless price hikes. It’s a move they’ve needed to make for some time, given that the auto landscape has been chaotic since the pandemic. Low inventory and complicated factory schedules gave manufacturers cover to ratchet prices up over the past few years. Now that cars are more readily available, old-fashioned discounts are coming back into play.

This shift could be a reaction to changing buyer sentiment. Many people, myself included, have a tough time accepting these sky-high prices as the “new normal.” It’s not easy to wrap your head around spending upwards of $45,000 to $50,000 on what’s considered an average new vehicle. Add higher interest rates to the mix, and the monthly bill can look brutal. Even with beefier incentives, a monthly payment can still feel out of reach. I know plenty of folks who just don’t see the value anymore, and I understand them. If anything, it makes me think that right now might not be the best time to buy unless there’s no other choice.

Some manufacturers seem to be testing how far they can stretch consumer goodwill. At some point, reality will catch up, and they might have to rethink their approach. Companies like Volkswagen and Nissan are reportedly offering more generous incentives, trying to lure people back into showrooms. Meanwhile, brands like Porsche continue to keep incentives slim, though it’s not impossible to score a good deal if you dig deep. I’ve got a friend who just managed to land a decent Porsche lease, which shows there are still exceptions, even if most Porsche dealers aren’t exactly eager to play ball.

A big part of the story is the rise in electric vehicle sales. EV prices actually dipped a bit from October to November, but incentives soared, making deals sweeter. This looks like a strategy to move more units and convince shoppers that it’s time to take the electric leap. There are certainly more EV models than ever and maybe a growing sense among manufacturers that they need to win over buyers who are still on the fence.

All this leaves me with a sense of caution. I’ve been watching the market closely, and it feels like everyone’s waiting to see who blinks first. Will prices finally level off and give everyday shoppers a fair shot at a reasonable deal? Will higher incentives and steadily building inventory change the game? For now, I’d say it’s not a bad idea to hold off unless you absolutely need a car. With so many forces tugging at the industry, it’s possible that the buyer’s position will improve if we give it a little more time.