New car prices fell 2.2% in January

While many people who buy new cars are still out of reach, those who can afford it will be happy to know that their affordability is at its most favorable level in 41 months. This improvement is due to the decline in average prices of new cars, coupled with the growth in average annual revenue across the United States.

New data suggests that in the U.S., the average number of new vehicles takes for the average new vehicle has dropped to 37.7 weeks in January, down from 38.2 weeks in December. This was also an improvement compared to 12 months ago, when the average income was 39.6 weeks.

Price drops and revenue growth improve affordability

according to Cox Automobilethe average price of new cars in the U.S. fell 2.2% in January to $48,641. Although this is still higher than the average trading price (ATP) of $48,031 a year ago, this trend is at least in favor of buyers.

Read: The average new car costs $48K, but buyers want to spend $35k

Meanwhile, prices fell and revenues rose by an average of 3.6%. Average monthly car payments in January also fell 1.3% to $755, reflecting a 1.7% decline compared to the same period last year. This is significantly lower than the $795 peak in December 2022.

“The affordability of new vehicles has increased from the lower prices that are typically observed after the surge in luxury brand sales in December,” said Jonathan Smoke, chief economist at Cox Automobile. “These lower prices , plus higher incomes, outperform lower incentives, and interest rates rose slightly in January.”

Several market segments have led to a decline in national ATP. For example, ATP in the full-size automotive sector has dropped 7.5% since December 2024, while prices in the luxury subtype SUV/cross category have dropped 6.4%. There are also declines in the luxury cars, compact SUVs/crossovers and high-performance cars sectors.

Significant exception to the downward trend

Interestingly, not all segments follow this downward trend. The average price of a luxury full-size SUV/crossover has risen by 4.1%, from $107,927 in December 2024 to $112,405 in January 2025. Similarly, high-end luxury cars rose 2.6%, with prices rising, from $117,652 in December 2024 to $120,765 this January.

While most buyers make better deals, some buyers have higher prices depending on the type of vehicle they are pursuing. It just shows how things like buyers’ preferences and seasonal patterns change the market. If you are looking for new cars in the market, be aware that these shifts may help you get a better deal.

Average transaction price of new cars (January 2025)