Times have been tough for car buyers since prices skyrocketed during the pandemic, but not all is lost for shoppers looking for a discount.
As inventory improves, some automakers are bringing back incentives – such as rebates and lease deals – to entice shoppers.
Incentives are still at historically low levels, but shoppers can still find deals. In January, incentives climbed slightly to 2.8% of a vehicle's average transaction – or sale – price, down from 8.6% two years prior but up from 2.7% in December, according to Kelley Blue Book.
And incentives on some vehicle categories are higher than the industry average.
Compact SUVs, for instance, had incentives of about 3.5% of the average sale price in January, while midsize cars had incentives of about 4.5%, said Brian Moody, executive editor at Autotrader.
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Meanwhile, electric vehicles and minivans had some of the lowest incentives at about 2% and less than 1%, respectively.
"You're not going to get much of a discount or a deal on minivans, same with EVs," Moody said.
What are car incentives?
Incentives refer to discounts (typically on older models or slow sellers) automakers offer shoppers to attract new car sales, according to Kelley Blue Book.
Some of the most common types of incentives include cash rebates, low-interest financing and special leases, according to car pricing site Edmunds.
How do I find a discount?
New-car buyers hunting for incentives should start by looking regionally, Moody said.
"There are often national incentives," Moody said, "But there are also different incentives – sometimes more, sometimes less – based on region."
Shoppers should keep in mind that incentives can also vary by brand and model.
Brands like Acura, Alfa Romeo, Buick and Infiniti currently have relatively high incentives, Moody said.
But before buyers start shopping or corresponding with a dealership, they should first check their credit score, especially amid rising interest rates, Moody said.
"That's the determiner of a lot of things, Moody said. "So know that first, and then you can negotiate or you can shop or you can plan with confidence."
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Are car prices dropping?
The average transaction price of a new vehicle has been above the average sticker price – or the manufacturer's suggested retail price – for more than a year.