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Car shopping during Labor Day weekend? This is what you can expect

Car shopping during Labor Day weekend?  This is what you can expect

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In pre-pandemic years, Labor Day sale events offered generous discounts on new cars as dealers strived to clear out the current year’s models and start selling the following year’s versions.

These days? Not so much.

According to a recent forecast from JD Power and LMC Automotive, the average discount on new cars offered by manufacturers is down 47.1% from a year ago to $969. August marked the fourth straight month of incentives falling below $1,000 .

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At the same time, the average new car price in August reached an estimated $46,259, 11.5% higher than a year ago and the highest ever, according to the JD Power/LMC forecast.

“Customers waiting for Labor Day sales events with significant discounts on outbound model year vehicles will find themselves frustrated with the lack of price cuts and choice of vehicles,” said Thomas King, president of the data and analytics division at JD Power, in a statement. the report.

Used car prices are starting to fall

But even as the average sales price for a new car continues to rise, Labor Day deal buyers may discover a general price reduction for used vehicles.

“Car buyers can’t expect to find anything close to the bargains of pre-pandemic Labor Day sales, but at least they can look forward to used car prices softening across the board on off to the holiday weekend,” said Jessica Caldwell, executive director of insights at Edmunds.

“While these price drops aren’t earth-shattering, they should be a welcome reprieve for consumers compared to the continued higher costs of new car purchases or leases,” Caldwell said.

Prices for 3-year-old cars are down 4.6% from peak

As the calendar gets closer to 2023, used vehicles are getting older and getting more miles, so they generally sell for less than they did earlier in the year, Edmunds said. In addition, an increase in the number of nearly new cars (not more than 2 years old) entering the second-hand market through trade-in is pushing down the price of 3-year-old vehicles.

The median selling price for 3-year-old cars was $31,302 in July, down 4.6% from their peak of $32,828 in January. Of more than 200 models in that age group, 92.8% have experienced a price drop this year.

For example, a 2019 Ford Fusion Energi, a plug-in hybrid electric car, sold for an average of $17,514 in July. That’s down $3,776 – 17.7% – from its peak of $21,290 in March. For a 2019 GMC Yukon, a full-size SUV, the average price in July was $50,478, which is $6,602 lower, or 11.6%, than the January high of $57,080.

There is also good news for those trading in a used car for one of those expensive new ones. According to the JD Power/LMC report, the average trade-in in August was an estimated $10,011, up 32.7% from a year ago and the third straight month above $10,000.

The automotive industry continues to operate in a challenging environment due to supply chain issues, including an ongoing shortage of computer chips. That shortage has led to higher prices in both the new and second-hand markets as consumer demand remains strong.

According to JD Power/LMC Automotive, in August an estimated 55% of vehicles were sold within 10 days of arriving at a dealership. The average number of days new cars spend on a dealer’s lot before they go on sale is about 20 days, compared to 25 days in the prior period.