Prices for New Vehicles Drop in January: Kelley Blue Book

Vehicles for sale are on display in a Toyota dealership showroom in Houston on Jan. 4, 2022. Brandon Bell/Getty Images

The average transaction price of new vehicles sold in the United States fell on a monthly basis in January amid lower luxury auto sales, according to vehicle valuation company Kelley Blue Book (KBB).

New vehicle average transaction price in January was at $48,641, down 2.2 percent from the previous month but up by 1.3 percent from a year ago, KBB said in a Feb. 11 statement.

The average transaction prices of new vehicles tend to “drop notably month over month in January, as the mix of luxury brand sales peaks in December and tumbles in January,” the company said.

“Many of the top luxury brands, including Audi, BMW, Cadillac, and Lexus, posted significantly fewer sales in January compared to December, with some brands’ sales volumes lower by more than 50 percent. With fewer high-priced vehicles in the sales mix, [average transaction prices] generally trend lower.”

Meanwhile, total new vehicle sales volume declined in January by more than 25 percent on a monthly basis but was up 5.1 percent yearly.

Erin Keating, executive analyst at Cox Automotive, attributed the monthly decline in new vehicle prices and sales volume to the market taking a “seasonal breather” following a “surprisingly hot December.”

On the electric vehicle (EV) front, average transaction prices rose by almost 1 percent in January from the previous month. Prices were down 1.4 percent from a year back.

The two most popular EV models in the United States—Tesla Model 3 and Model Y—registered an annual price hike, rising by 6.2 and 2.2 percent, respectively.

Overall auto sales volume last year was projected to be nearly 16 million units, according to data from S&P Global Mobility. For 2025, the company is forecasting sales to rise 1.2 percent to 16.18 million units.

An S&P manager, Chris Hopson, said that new vehicle affordability issues that limited auto demand level for most of last year are not expected to be “resolved quickly” this year.

“Vehicle pricing levels are expected to decline but remain high; interest rates are expected to shift further downwards, but inflation levels are anticipated to remain sticky, and new vehicle inventory should also progress, but careful management is expected too,” Hopson said.

“Combined with an uneasy consumer, we project this translates to mild growth prospects for U.S. auto sales.”

Tariff Impact

A key determinant of U.S. auto sales over the coming months would be potential tariffs imposed by the Trump administration on foreign imports.

President Donald Trump had announced 25 percent tariffs on imports from Mexico and Canada earlier this month, which was paused for 30 days following negotiations.

Both Mexico and Canada are key players involved in the U.S. car industry, with the two nations making up “nearly half of U.S. imports and exports of motor vehicles and parts,” according to a Jan. 29 post by think tank Cato Institute.

“A 25 percent tariff on these products would not just harm U.S. consumers—both individuals buying vehicles and manufacturers using automotive inputs—but could also expose U.S. companies to decreased sales in, and potential retaliation from, Canada and Mexico,” the post said.

Trump recently suggested a potential 50 to 100 percent tariff on Canadian cars. The president has also imposed a 25 percent tariff on steel and aluminum imports, which are key inputs in the auto industry.

In a Feb. 4 commentary, Cox Automotive said that any significant tariff across North America “will disproportionately impact our market’s most affordable vehicles.”

“Our estimates suggest the average tariff on models assembled in Canada or Mexico, or with reported content from those countries, would increase the cost of a vehicle by $5,855. This amounts to 16.6 percent of an average new-vehicle price,” Cox said.

However, the company “remains confident that compromises will be worked out in due time and any tariff pain will be the short-lived, not long-term, policy adopted by the United States. Ultimately, the stakes are too high.”

Cox Automotive said that if tariffs are imposed, they are expected to directly impact half of the 50 best-selling models in the United States, which represent roughly 60 percent of market volume.