New vehicle prices dropped for the third straight month in March, but consumers are still paying above sticker price for new cars, according to new data from Kelley Blue Book (KBB).
Although sales prices are declining, March marked the 10th month of an "over sticker" market where drivers paid well above the manufacturer suggested retail price (MSRP) for their new car, according to KBB.
That’s because dealerships only had around a 30-day supply of new-vehicle inventory. During the month, new vehicles from Kia, Honda and Mercedes-Benz averaged between 7.8% and 9.8% over MSRP, on average. However, transactions from Volvo, Buick and Lincoln were selling at about 1% below MSRP.
"With a myriad of supply chain issues disrupting global vehicle production, we expect inventory to remain tight through the rest of the year and prices to remain high," Cox Automotive Executive Analyst Michelle Krebs said.
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New car prices in March – by the numbers
The average new car price was $45,927 in March, a 0.3% drop ($156) from February, according to KBB. This marked the third consecutive month of declines following December's record high but is still up 12.9%, or $5,247 from last year.
Amid non-luxury car buyers, the average price paid dropped $53 month-over-month to $42,364. While this was the fifth consecutive decline, car shoppers still paid an average of $970 more than the sticker price. For comparison, non-luxury vehicles sold for $1,300 under MSRP last year.
Luxury car buyers, on the other hand, saw their price for a new vehicle increase by $272 month-over-month to an average $65,123. The average buyer paid $2,550 above MSRP in March, compared to having paid more than $2,400 under sticker price last year.
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How to keep your auto costs low
New car buyers who are looking to keep their costs low amid rising prices have several options available to them. Here are a few:
The price of a new car depreciates by about 20% within the first year after driving it off the lot, according to Carfax. And while used car prices are also surging, up about 40% year-over-year, they can be more economical than buying a new car.
But even beyond the initial cost of buying the car, other expenses also decrease with a used car. For instance: the price of insurance. Nationally, auto insurance premiums decrease by about 3% for each year the vehicle ages, according to a study.
Shop for insurance
Auto insurance companies often give out discounts for different reasons. As drivers’ situations change, such as their driving history, their credit history or needing to add teenagers to the policy, a different insurance company could be able to offer a better rate. It is a good idea for drivers to look around every few months to ensure they continue to get the best rate available to them. They can do this through an insurance marketplace like Credible, which allows them to compare multiple insurance companies at once.
Upgrade your safety tech
For those who want to buy a new car, safety technology, while creating additional fees upfront, could be one investment that pays off. For example, electronic stability control (ESC) can lower your car insurance policies by about $9 per year.
If you are interested in saving on your auto insurance coverage, contact Credible to speak to an insurance expert and get all of your questions answered.
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