The average price of new cars climbs to $46,000

New car prices hit a record high last month as buyers paid more than the list price in an environment of high demand and tight supply.

The average transaction price for new vehicles sold in the United States in October rose 12.9% year-over-year, or $5,266, to $46,036, according to Kelley Blue Book, an accounting firm. Vehicle Appraisal and Automotive Research based in Irvine, CA.

Prices were boosted by higher luxury sales and a preference for large SUVs and pickup trucks. Luxury sales reached 16.3% of the total market, compared to 15.2% last year. The average price for a luxury vehicle was $61,020.

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The average selling price of all vehicles was 2%, or $800, above the manufacturer’s suggested retail price.

“Whether desperate or impatient, consumers continue to pay hundreds of dollars above the suggested price for new vehicles,” said Kayla Reynolds, analyst at Cox Automotive.

“While the average transaction price reached a new record high, the average incentive package fell to its lowest level in 20 years,” she added. “It’s absolutely a seller’s market right now.”

Record prices may hamper sales, but supply constraints make it difficult to know for sure.

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New vehicle sales increased 4.2% from September to 1.056 million units; however, this is down 22.4% from the same period last year and 21% from October 2019 levels.

Vehicle inventories remain well below normal levels due to the global chip shortage that has developed in the wake of the pandemic.

Automakers, including Ford Motor Co. and General Motors Co., halted production at some plants due to inability to secure chips.

The shortage of new vehicles has pushed consumers into the used vehicle market, causing prices to spike.

Prices for used vehicles at the wholesale level climbed 9.2% month over month in October, according to the Manheim Used Vehicle Value Index. They were up 38.1% over last year.

CONSUMER PRICES RISE THE MOST IN 31 YEARS

Cars are not the only goods to see their prices skyrocket this year.

The October consumer price index released on Wednesday showed prices rose 0.9% in October and were 6.2% above levels a year ago. The annual increase was the largest in 31 years.

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