Following several years of steady increases, Ford average transaction pricing finally began to decline early this year, and that trend continued through the first half of 2023. However, Ford average transaction pricing actually increased by 3.4 percent in May, reversing that trend temporarily, even as the overall industry experienced a mere 0.5 percent month-over-month increase in ATP. However, it seems as if that trend was short-lived, as Ford average transaction pricing decreased yet again in the month of June, according to new data from Cox Automotive, fulfilling Ford CEO Jim Farley’s prior prediction.
Last month, Ford’s ATP dropped by an even one percent, going from $56,637 to $56,087. That’s still 3.4 percent higher than it was in June of 2022 – $54,223 – but it’s a stark contrast from the 9.1 percent year-over-year increase we saw in May. However, it also outpaced the entire automotive industry as a whole, which saw its ATP rise by 0.3 percent, from $48,658 to $48,808, which is just 1.6 percent higher than last June.
Regardless, that 1.6 percent rise represents the smallest year-over-year increase in ATP since the start of the pandemic in early 2020, while a first-half drop of 1.7 percent is the largest over that particular time period in a decade. This coincides with the highest level of incentive spending since October 2021 – averaging $2,048, or 4.2 percent of the average transaction price – which helped buoy a 20.7 percent year-over-year increase in sales.
“The fact that average transaction prices are up a meager 1.6 percent year over year in June is notable,” said Michelle Krebs, executive analyst at Cox Automotive. “A year ago, the industry was looking at transaction prices that were consistently up 10 percent to 12 percent year over year. With no inventory in place, it was inflation gone wild. Now, as inventory has been consistently building and supply and demand are finding a balance, the price gains seem to be well under control. In fact, average transaction prices are down from the start of the year. That’s good news for shoppers.”