A new report from Kelley Blue Book shows a fifth consecutive record-setting month of all-time high prices for new vehicles. The average transaction value (ATP) for a new vehicle increased 1.6 percent to $43,355 from $42,670 in July.
The highs are accompanied by slow sales momentum for the fourth consecutive month as car buyers have faced limited inventory, high prices and historically low incentives. Total July sales were just 1,092,302, the lowest monthly sales in a decade.
“The automotive industry is still grappling with the extraordinary circumstances of the past year and a half, setting new records,” said analyst Kayla Reynolds at Cox Automotive. “With the ongoing inventory challenges that auto manufacturers are facing across the board, coupled with historically low incentive spending, car buyers are the ones paying the price, quite literally. New car prices keep climbing month after month. “
Porsche, Genesis, Land Rover and Subaru had the lowest incentive spend last month, with average transaction value less than four percent. On the opposite end of the spectrum, Alfa Romeo, Buick and Infiniti each had incentive levels more than twice the industry average.
“The figures bear it out: 43 percent of all vehicles sold in August are within seven days or less of arriving at a dealership, with 16 percent of vehicles arriving,” said Tyson Jomini, vice president of data. Analytics at J.D. Power, Told Granthshala. “In August 2019 these metrics were 9 percent and 20 percent, respectively, for the same day and less than 10 days.”
Barring Fiat and Porsche, almost every brand saw year-on-year price increases last month. Porsche continued to deliver the industry’s highest ATP in August at $96,344, but saw a slight drop in prices on lower sales of the brand’s most expensive sports cars. Porsche incentives are among the lowest in the industry.
Last month, luxury sales in the overall market stood at 16.2 per cent, up from 14.4 per cent a year ago.
Last month, new vehicle customers paid an average of $58,766 for a luxury vehicle. Luxury brands, notably Acura, Cadillac, Genesis and Mercedes-Benz, posted year-on-year ATP gains of more than 20 percent. Consumers continue to pay nearly $100,000 for a new Cadillac Escalade, with more than 2,000 new examples of the model sold in August.
Last month the average transaction value for a new fiat was just under $27,000, the lowest in the industry according to Kelley Blue Book. However, Fiat ATPs were down 5 per cent from a year ago and the brand sold only 128 units last month.
Electric vehicle prices declined year-on-year in August. New entries, including the Chevrolet Bolt EUV, Ford Mustang Mach-E and Volkswagen’s ID.4, have brought down average electric vehicle prices from $57,346 to $49,938 over the past year.
“The biggest change is that consumers are pre-ordering vehicles and waiting to buy. US car buyers are conditioned to buy a lot through an extensive retail catalog,” Jomini said. “Dealers had 2.99 million retail units as recently as August 2019, but the US industry ended this August with only 880,000 new vehicles in stock.”