Prices of new cars rose last month, along with sales numbers and higher incentives offered by dealerships, according to automotive research company Kelley Blue Book.

The average transaction price for a new vehicle in November was $48,724, up 1.5 percent year-over-year, according to a Dec. 11 statement from Kelley Blue Book. This was the second consecutive month of year-over-year increases. Despite the higher prices, new vehicle sales rose last month.

“Higher prices were met with higher discounts in November, which has kept the retail business moving,” said Cox Automotive Executive Analyst Erin Keating.

“Following the national election, pent-up demand and some improvements in consumer confidence seem to be driving the market. And higher incentives are certainly helping as well,” he said.

While prices of vehicles only rose 1.5 percent, November incentives were up over 50 percent over last year, likely contributing to the boosted sales.

At the beginning of November 2024, there were more than three million new vehicles, a first since 2020, providing buyers with more options to choose from.

Keating pointed out that transaction prices typically rise as the year-end approaches since the sales of luxury vehicles tick up.

“If sales volumes in November are any indication, we think 2024 will end on a positive note for the auto business. Yes, prices are trending higher year over year, but higher incentives and discounts are bringing in buyers,” he said.

Vehicle prices may decrease soon as the U.S. Federal Reserve cuts down interest rates. The agency has already made two rate reductions in recent months.

S&P Global noted in a report that more prospective buyers with excellent credit may come forth as many had put off getting a new car amid high prices.

“These shoppers are primed to jump back into the market because of lower interest rates and their ability to qualify for most loans,” the report said.

EV Prices, Credits

While average transaction prices (ATP) of new vehicles overall jumped on a yearly basis in November, average prices for new EVs fell 3.8 percent year-over-year in November.

“Incentive spending on EVs jumped, reaching 14.9 percent of ATP, the highest level since the pandemic,” Kelley Blue Book noted. “At 14.9 percent of ATP, the typical incentive package last month for a new EV exceeded $8,200, which includes, when applicable, point-of-sale government-backed incentives.”

EV owners can obtain federal tax credits of up to $7,500 for new electric vehicles, provided certain criteria are fulfilled, like the vehicle having undergone final assembly in North America. Questions have been raised about whether these credits would continue under the Trump administration.

During his campaign, President-elect Donald Trump said he would “end the electric vehicle mandate on day one” of his second term. Last month, California Gov. Gavin Newsom responded that he was looking into potentially creating EV rebates at the state level if the incoming president were to scrap federal EV credits.

Karoline Leavitt, a spokeswoman for Trump’s transition team, clarified that the president-elect “will support the auto industry, allowing space for both gas-powered cars and electric vehicles.”

The removal of federal EV credit will negatively affect sales of these vehicles, according to an October study.

“In December 2023, Germany removed a $4,900 EV subsidy. Annualized EV sales in the first 10 months of 2024 in Germany fell by 26.6 percent,” the study stated. If these credits are repealed, it “would decrease US EV registrations by 27 percent,” the researchers estimated.

New EV demand could also be negatively affected by declining used EV prices which are falling at a much faster pace than their gas counterparts. Prospective owners are hesitant to buy electric vehicles if they can only sell them later at heavily discounted rates.

“Used [EV] prices have fallen four times faster than hybrids and six times faster than gasoline models, losing 24.7 percent of their value [between August 2023 and August 2024],” according to a September report by iSeeCars. “This compares to a 6 percent drop in used hybrid prices and 4.4 percent drop in used gasoline prices.”