New Car Prices Drop as Chip Shortage Eases and Dealer Lots Fill Up

New car prices in the US are falling after years of increases, helping ease inflation pressures. More vehicles are now available on dealer lots after shortages.

The price spikes of recent years were caused by a shortage of computer chips needed for auto manufacturing, which limited production.

With chip supplies now steady, production is increasing and dealer inventories are rising. This gives consumers more bargaining power and competitive pricing.

Average new car transaction prices fell 1.2% in January 2023 compared to a year earlier. Used car prices also dropped 3% from last year.

Analysts expect further discounts and incentives in 2023 as inventories continue growing. However, used car supplies remain tight, limiting price drops.