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