The average price of new cars exceeds $ 45,000, the price of used cars exceeds $ 25,000

Now is a good time to sell a car or truck, or to trade in one. Corn New or used, the cost of a replacement is up from a year ago.

The average new vehicle transaction price, a measure of how much people actually pay, exceeded $ 40,000 all year and hit $ 45,031 in September, according to data from Kelley Blue Book. That’s an increase of $ 4,872 or 12.1% over the past year.

Used Vehicle Retail prices are also “incredibly high”, averaging over $ 25,000 at retail since June, up more than $ 5,000 from a year ago, said Charlie Chesbrough, senior economist at Cox Automotive, during a webinar hosted by the American International Automobile Dealers Association. .

The average transaction price for new vehicles has hit record highs (months compared to the previous month) for six consecutive months, according to Kelley Blue Book, which tracks market values ​​for new and used vehicles.

Even the leap of a month new car prices was dazzling: $ 1,613, or 3.7% from August to September, said Kayla Reynolds, analyst for Cox Automotive, parent company of Kelly Blue Book. October figures will be released by mid-November.

The perfect storm

From a seller’s perspective, “it’s kind of a perfect market,” Reynolds said in a telephone interview. “It is well known that new and used vehicles are scarce and in high demand. “

The shortage of new vehicles is due to a shortage of computer chips used to control electronics in modern cars and trucks, in addition to shortages dating back to auto plant closures last year, due to the coronavirus pandemic.

By the end of the summer, the available supply of new vehicles was down 73%, or about 2.5 million vehicles (which were not built and shipped to dealerships), compared to days before. Covid 2019, according to Cox Automotive.

Used cars are in short supply too

For related but not entirely identical reasons, the Used vehicles and trucks are also experiencing a shortage of inventory, which has also pushed up prices.

Companies that hold dealer-only wholesale auctions where dealers buy a large portion of their used inventory complain that the volume is declining compared to their largest sources of sales. used vehicles – customer exchanges, rental returns, repossessions and old rental cars daily.

Trade is down because customers can’t find the cars and trucks they want, or because buyers are starting to postpone their purchases due to high prices. Rental returns are on the decline as many customers buy their own rental returns instead of just handing them over. Residual values ​​shown on rental documents – the fixed amount for which a customer can purchase the car excluding the rental, is typically thousands of dollars less than its actual value. See, “How to capitalize on the high value of your rental car.

Rests are going down, because during the Covid, many lenders observed a moratorium on repossessions. And rental returns to auction houses are dropping, because travel has been very low until recently and factories are diverting scarce supplies. new cars and trucks to retail customers, and bypass rental fleets.


High prices of “almost new” cars

While used vehicle prices are still much higher than a year ago, values ​​on average have plateaued in the wholesale market over the summer, according to auction firm KAR Global . Then they resumed in September and October.

In September, KAR Global said the average price of used vehicles at a wholesale auction had increased 20.3% from September 2019 to $ 15,546.

Prices also continue to rise for the highly sought-after class of three-year-old used cars, which are often reconditioned, have a factory warranty, and resold at a higher price at dealerships as used cars. certified opportunity, abbreviated CPO. By comparison, prices for used midsize sedans matching the CPO profile have increased by around 27% over the past year and 39% over two years, says Tom Kontos, chief economist at KAR Global. For mid-size SUVs or crossovers with the potential to become CPO vehicles, the wholesale price increase has increased by 31% and 34% in the past one and two years, respectively.

CPO vehicles are the closest thing to new cars, Kontos says, so they order wholesale and dealer bonuses.

Many (with money in the bank) can afford higher prices

Both for new and for occasion, the strong demand is in part the pent-up demand for Covid closures. Additionally, Covid has made people think twice before using public transport or carpooling. Finally, in historical terms, US households are also sitting on unusually high savings, according to Chesbrough of Cox Automotive.

The accumulated savings stood at $ 3.9 trillion at the end of the summer, nearly double the level of the previous year, he told the webinar.

Despite rising gasoline prices and somewhat shaken consumer confidence, “this level of accumulated savings will not be spent so quickly,” Chesbrough said. “We may be worried, but we don’t need to be too pessimistic about it.”

Under these circumstances, automakers have reduced discounts on new vehicles. Kelly Blue Book said the incentives as a percentage of the average transaction price fell to 5.6% in August, down from what was a 10-year low of 5.9% in July and down from a 10-year low of 5.9% in July. at 10.1% in August 2020. These trends continued in the fall. .

Where the prices of the car segment have increased the most

Some new car segments have seen price increases above the average increase of 12.1% from a year ago. They were led by vans, up 16.4%; hybrid / alternative energy cars (but not electric vehicles) and midsize cars, both up 15.1%; and high-end luxury cars, up 14.4%. The average selling price of a high-end luxury car hit $ 119,312 in September, that of a high-end luxury full-size SUV / crossover hit $ 102,191.

The categories with the smallest price increase from a year ago were full-size SUVs / crossovers (mainstream), up 2.3%; electric cars, up 3.5%; and subcompact cars, up 5.0%. The modest increase in prices for electric vehicles is at least in part due to the increased availability of consumer electric cars.

Individual brands with strong price increases in September 2021 compared to a year ago were Cadillac, up 51.2%; Genesis up 29.7%; and Mercedes-Benz, up 25.8%. KBB warned that a change in the model lineup from 2020 to 2021 can skew a brand’s price increase or decrease (-2% in the case of Decree).

In addition to comparatively short to medium term factors such as the shortage of computer chips, there is a long term trend for customers to move away from passenger cars for bigger and more expensive crossovers, SUVs and vans – to such an extent that the domestic market, manufacturers, in particular, have even given up offering many passenger cars, in favor of trucks, which are also more popular and more profitable.

Plus, better safety and emissions equipment can raise prices

In addition, prices are on the rise as vehicles today are fitted with standard equipment for high-level safety and emissions. Some of these items are required, such as reversing cameras (since 2018).

But there are also a growing number of optional advanced driver assistance systems, such as automatic emergency braking to avoid frontal collisions, and premium infotainment, with video display.

Average transaction prices topped $ 40,000 for the first time, in the third quarter of 2020, said Kelly Blue Book’s Reynolds. It was then that it was already evident that consumer demand for new vehicles had returned much faster than new vehicle production could resume.

This article, The average price of new cars exceeds $ 45,000, the price of used cars exceeds $ 25,000, originally published on Councilor Forbes.

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