People who have been waiting to buy a new car may spot some good discounts over Memorial Day weekend on 2023 model-year vehicles, especially on some domestic cars, as affordability issues have led inventory to pile up.
The average discount this month on a 2023 model-year car is $4,147. In comparison, the average discount last year for a 2022 model-year vehicle was $1,919, according to a new study by car-buying site Edmunds.
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“Discounts on outgoing model year vehicles this Memorial Day weekend are a bright spot for consumers in an otherwise challenging market,” Jessica Caldwell, head of insights at Edmunds, said in a statement. Brands from Detroit automakers in particular “are seeing the greatest buildup of inventory on dealer lots and therefore could offer the biggest discounts for car shoppers this holiday weekend,” the Edmunds report said.
New-vehicle inventory at the start of the month stood at 2.84 million units, up 51% from a year ago, according to Cox Automotive. “For the first time in a long time, good ol’ fashion Memorial Day sell-a-thons will likely be raging this weekend,” Cox said in a report.
It is not clear whether these discounts will be enough to incentivize buyers. With an average price of more than $47,000 for a new car, affordability remains poor compared with before the pandemic, according to Cox. The typical monthly payment for new-vehicle loans is above $750, but half of American households can only afford a $400 monthly payment.
The brands with the biggest discounts — defined as the difference between average manufacturer suggested retail price and the average dealer listing price — on their 2023 cars are Dodge ($6,753), Chrysler STLA ($6,252), Jeep ($6,160), Infiniti NSANY ($5,781), Volvo GELYF ($5,354) and Volkswagen XE:VOW3 ($5,221), according to Edmunds.
Slower-selling models, specifically sedans and hatchbacks, as well as electric vehicles, are expected to have better deals, Brian Moody, executive editor at Autotrader and Kelley Blue Book, said in a statement. Meanwhile, he expects dealers to still command full sticker price for popular models such as compact SUVs.
Buyers looking at popular Japanese brands such as Toyota JP:7203, Subaru JP:7270 and Honda JP:7267 — which have much smaller vehicle inventory buildups — will see more modest discounts of $1,337 for 2023 model-year Toyotas, $1,450 for Subarus and $786 for Hondas, according to Edmunds.
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