Average Car Payment To Hit $736/mo In May 2023

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Automotive Editor

Based out of the Washington, D.C. area, Joel Patel is an automotive journalist that hails from Northern Virginia. His work has been featured on various automotive outlets, including Autoweek, Digital Trends, and Autoblog. When not writing about cars, Joel enjoys trying new foods, wrenching on his car, and watching horror movies. 

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, Automotive Editor - May 26, 2023
2023 Volvo XC90

Automakers are finally getting new cars to dealerships and consumers are more than happy to purchase them. According to the latest data from J.D. Power, May 2023 is expected to be a great month for new-car sales, as new car sales are expected to reach 1,337,700 units – an increase of 15.6% from last year. Unfortunately, while consumers will be able to find a vehicle at a deanship, new-vehicle transaction prices are still on the rise, as the average monthly payment this month is set to hit $736.

J.D. Power reports that the average price of a new vehicle is expected to reach $45,838 this May, which is a 0.7% increase from last year. In addition to rising new vehicle prices, the average interest rate for new cars has also gone up. Interest rates are expected to hit 7%, 206 basis points higher than last year. Put these two figures together, and shoppers are looking at incredibly high monthly payments. J.D. Power claims that the average monthly finance payment in May is on track to reach $736 or $48 higher than last May.

Despite high new car prices and an average monthly payment that’s above $730, shoppers are buying more cars than before. Shoppers are set to spend roughly $46.9 billion on new vehicles this month. That figure represents an increase of 13% compared to last year.

2023 Cadillac LYRIQ

New car prices and incredibly high monthly payments are bad things for shoppers, but there is some good news from J.D. Power’s report. Shoppers are more likely to find a car on dealer lots this May than they were last year. Retail inventory levels this month are expected to finish with roughly 1.3 million units. That’s consistent with the figures from April and is a 48% increase from 2022.

The improvement in the availability of vehicles has led to decreased dealer margins and increased manufacture incentive spending. While dealer profits remain above levels, more new car inventory is bringing dealer profits down. The report states that total retailer profit per unit is expected to hit $3,732, which is 25.8% lower than last year.

The main reason for lower total retailer profit per unit is due to the decrease in the number of vehicles that are being sold above MSRP. J.D. Power reports that only 31% of new vehicles are projected to be sold above MSRP this month. That’s incredibly high, but it’s lower than 49% last July.

Source: JD Power

Pictured: 2023 Volvo XC90 (Top), 2023 Cadillac LYRIQ (Middle)

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, Automotive Editor

Based out of the Washington, D.C. area, Joel Patel is an automotive journalist that hails from Northern Virginia. His work has been featured on various automotive outlets, including Autoweek, Digital Trends, and Autoblog. When not writing about cars, Joel enjoys trying new foods, wrenching on his car, and watching horror movies. 

Follow On: Twitter

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