US new car dealers kick off holiday sales with better incentives Reuters

© Reuters. Vehicles for sale are seen at Serramonte Ford in Colma, California, U.S., October 3, 2017. REUTERS/Stephen Lam/File Photo

Author: Nathan Gomes

(Reuters) – U.S. auto dealers are set to close out the year with generous incentives and discounts during winter sales aimed at clearing inventory of older vehicles and gearing up for the new year by taking advantage of sustained consumer demand.

For four consecutive years of year-end sales, automakers have offered minimal discounts to potential customers as they sought to capitalize on demand for new vehicles, 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 earlier, according to Kelley Blue Book data. ATP was $39,203 for the same period in 2019.

In addition, inventories are currently at their highest since early spring 2021, leaving dealers and automakers scrambling to make room for new models that are expected to fill up by January.

Automakers have already started offering incentives and lowering transaction prices to entice more buyers to purchase new vehicles.

“Incentives for new vehicle sales rose 136% year-over-year in November, indicating that 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.

According to Cox Automotive, the Stellantis-owned Jeep held the highest inventory at 128 days in early December.

Before the pandemic, a 60-65 day supply was “normal” for the industry, although some brands like Toyota Engine (NYSE: ) a Honda (NYSE: ) usually work with a lower bid.

Jeep is now offering its Gladiator truck and Compass crossover with discounts of $8,257 and $5,851 off their sticker prices.

Brands like Kia, General Motors (NYSE:)’ Chevrolet, Mercedes and Hyundai (OTC:) have started offering cars at some discounts during the holiday season.

New vehicle prices have climbed to all-time highs over the past few years, prompting some potential buyers to even consider used options.

As a result of higher vehicle prices, retailers and car manufacturers have made high profits in recent years, despite fewer units sold.