By Nathan Gomes
(Reuters) - American car dealers are set to wrap the year with generous incentives and discounts during winter sales, aiming to clear older vehicle stocks and prepare for the new year capitalizing on sustained demand from consumers.
Over four consecutive years of year-end sales, automakers have offered minimal discounts to prospective customers as they looked to cash in on new vehicle demand, helping dealers clear inventory.
However, the average transaction price (ATP) for new vehicles in November 2023 fell 1.5% to $48,247 from a year ago, according to data from Kelley Blue Book. The ATP was $39,203 for the same period in 2019.
Additionally, inventory levels are currently at their highest since the early spring of 2021, leaving dealers and automakers scurrying to make way for new models, which are set to pour in by January.
Automakers have already started offering incentives and lowering transaction prices to get more buyers to snap up new vehicles.
"New-vehicle sales incentives were up 136% year over year in November, indicating the new-vehicle market is shifting to a buyer's market, not a seller's market," Cox Automotive said in a report. Average incentives are currently hovering around the $2,500 mark.
Stellantis-owned Jeep held the highest inventory at 128 days at the beginning of December, according to Cox Automotive.
Before the pandemic 60 to 65 days' supply was "normal" for the industry, although some brands like Toyota Motor (NYSE:TM) and Honda (NYSE:HMC) typically work with lower supply.
Jeep is now offering its Gladiator truck and Compass crossover with discounts of $8,257 and $5,851, respectively, on their sticker prices.
Brands such as Kia, General Motors (NYSE:GM)' Chevrolet, Mercedes and Hyundai (OTC:HYMTF) have begun offering vehicles with some discounts during the holiday season.
New vehicle prices had surged to an all-time high over the past few years, nudging some prospective customers to even consider used options.
As a result of the higher vehicle prices, automotive retailers and carmakers raked in lofty profits over the past few years, despite fewer units sold.