New Car Prices Skyrocket as Buyers Pay Over $5,000 More on Average — Analysts Emphasize ‘Seller’s Market’

Shocked woman in car reading insurance paper stock photo
SIphotography / iStock.com

For the seventh month straight, new vehicle prices have jumped — hitting another all-time high in October. According to a new report from Kelley Blue Book, Cox Automotive reported that at $46,036, the average transaction price for a new vehicle was up 12.9%, or $5,266, compared to October 2020. Prices are also up 2%, or $910, from September.

Let Us Know: Is Inflation Affecting How You Spend Your Money? 
Discover: Why Now Is the Time To Invest In an Electric Vehicle

New vehicle inventory is well below normal levels. Chip shortages and supply chain issues have resulted in the global auto industry producing 1.5 million to 5 million fewer vehicles this year than originally planned, The Washington Post reported. Automakers are using available microchips in higher-end, higher-margin products, according to Cox Automotive. Luxury buyers paid an average of $61,020 for a new vehicle last month.

The average new vehicle is also selling 2% above the manufacturer’s suggested retail price, or MSRP, in October. This means that buyers were paying an average of $800 over the sticker price last month, Cox Automotive noted. In October 2019, buyers were paying about $2,300 below the MSRP.

Make Your Money Work for You

Related: 50 Most Environmentally Friendly and Affordable Vehicles

Every brand has also reduced inventive spending month over month. “While the average transaction price jumped to a new record high, the average incentive package fell to a 20-year low,” said Kayla Reynolds, analyst for Cox Automotive. “To score a new vehicle, buyers are accepting no-haggle pricing, with significant market adjustments in some instances. It is absolutely a seller’s market right now.”

Explore: Elon Musk Sold $5 Billion of Tesla Shares – Should You Be Concerned?
Find: The Best and the Worst Time of the Year To Buy a New Car

Looking to the future, Kelley Blue Book sees little relief from high new-vehicle prices as supply is expected to remain tight during the first half of 2022. Automakers will also continue to focus on high-revenue products and move away from more affordable sedans.

More From GOBankingRates

About the Author

Josephine Nesbit is a freelance writer specializing in real estate and personal finance. She grew up in New England but is now based out of Ohio where she attended The Ohio State University and lives with her two toddlers and fiancé. Her work has appeared in print and online publications such as Fox Business and Scotsman Guide.

Untitled design (1)
Close popup The GBR Closer icon

Sending you timely financial stories that you can bank on.

Sign up for our daily newsletter for the latest financial news and trending topics.

Loading...
Please enter an email.
Please enter a valid email address.
There was an unknown error. Please try again later.

For our full Privacy Policy, click here.