Following several years of falling sales numbers, the first month of 2019 did not bring the promise of a better year ahead for the auto industry. J.D. Power and LMC Automotive released a forecast of auto sales for January 2019 and the results might make you think twice about buying a new vehicle. Here are the findings and some tips on navigating the hike in new car prices when shopping.

Auto Sales Continue to Fall

nissan rogue red front 34
Even the once top-selling Nissan Rogue has dropped almost 24% in sales from 2018.

Compared to January of last year, retail sales are predicted to fall by 2.4% at 864,300 units for January of 2019. The start of the year was especially sluggish thanks to winter weather and the government shutdown which slowed sales down even more than expected. According to the J.D. Power forecast, the nationwide sales to-date were down 3.8% while the North Central region was down 6.2% due to snowstorms in the Midwest.

Considering that this is the third consecutive year that retail sales declined at the start of the year, the reported numbers were not unexpected. The surprise here is that automakers continue to turn a profit thanks to record-high vehicle prices and reduced incentive spending. Unfortunately for consumers, that means purchasing a new car will be more expensive.

Higher Vehicle Prices

red camry
The popular Toyota Camry is already $200 more in 2019 than in 2018, and it will climb even higher.

The average vehicle price reached $33,285 in January which sets a record high for the month. SUVs and trucks are faring better than cars when it comes to sales numbers but that isn't keeping the prices for these two hot segments from climbing. Passenger car prices are up 5%, hitting a record average price of $27,708 while truck and SUV prices are up 2% with an average of $35,659. New tariffs aren't helping matters, especially for imports. Consumer Reports quoted Toyota stating that the Camry will get as much as an $1,800 price hike as a result. 

Even with the higher prices, consumers are flocking to SUVs and trucks. The two segments accounted for 69.6% of all new-vehicle sales through mid-January, the highest percentage in history for this time of the year. Despite fewer overall vehicle units sold, consumers collectively spent $28.8 billion in January 2019 which is slightly above last year's spending for the same month. 

Less Incentive Spending

car sale sign

In addition to raising vehicle prices, automakers are also restricting incentive spending. For the seventh month in a row, incentive spending will decline year over year. The incentive spending per vehicle for January is $3,720 which is a decrease of $136 from last year. This helps automakers maintain a profit with fewer units sold but also means that consumers are paying more for their new cars.

 How to Save on Your Vehicle Purchase 

2014 cr-v
Those new car price hikes sure make this used 2014 Honda CR-V look pretty appealing.

With climbing vehicle prices and fewer incentives, car shoppers are noticing that buying a new car is much more painful on their wallets than it was even five years ago. If you don't want to pay more just to keep automakers above water, you can consider buying a used vehicle, shopping around for deals online before going to the dealership and brushing up on your negotiating tactics. 

Buy Used Instead

Buying a low-mileage used car can save you thousands of dollars on the purchase price and helps you avoid new car depreciation. Depreciation is the single highest cost of owning a car with an average of 35% after just 3 years. Even if you find a reasonably priced new car, you're still likely going to lose money on it. Thankfully, nowadays you can feel nearly as confident when you buy a used car as when you buy new. Getting a vehicle history report and an inspection by a professional mechanic or buying a certified used car at a reputable dealership gives you the peace of mind you need. 

Find Local Used Car Discounts

woman negotiating at dealership

Be a Savvy Shopper

If you're set on buying a new car, being an informed consumer can significantly reduce what you pay for the vehicle. Shopping around for incentives and discounts online before you go into the dealership helps you compare and negotiate when it's time to talk price. When you sit down with the salesperson, show them that you've done your homework and stick to the number that you're willing to pay for the vehicle. Don't be tempted by add-ons or more expensive trim levels that can quickly blow your budget. If the salesperson won't accommodate what you believe to be a fair price, you can walk out and go elsewhere. 

Find Local Discounts on a New Car