If you thought new vehicle prices might hold steady for awhile, think again. They continue to climb and in September, prices surpassed those in August, hitting another new record high according to Kelley Blue Book. KBB reports that September's average transaction price (ATP) of a new vehicle surpassed $45,000 for the first time. It also marks the sixth month in a row of rising new vehicle prices.
September Car Sales
A KBB press release reports September's average new vehicle price (ATP) at $45,031, up 12.1% (or $4,872) from one year ago in September 2020 and up 3.7% (or $1,613) from August 2021.
Researchers say the all-time-high prices accompanied the fifth straight month of a slowing sales pace. KBB reports that total sales last month numbered just 1,012,797, a 7.3% month-over-month decrease and one of the lowest volumes in the past decade.
A big reason for the rising prices is related to consumer demand. KBB says it's shifting away from lower-priced sedans, compacts and entry-level segments and towards more-expensive pickups, SUVs and luxury market vehicles.
"The record-high prices in September are mostly a result of the mix of vehicles sold," said Kayla Reynolds, analyst for Cox Automotive. "Midsize SUV sales jumped in September compared to August and full-size pickup share moved up as well. Sales of lower-priced compact and midsize cars, which had been commanding more share during the summer, faded in September. As long as new-vehicle inventory remains tight, we believe prices will remain elevated."
Lower Incentive Spending
While new vehicle prices climb, incentives spending continues to drop. KBB says incentive spending fell in September to another record low, dropping to 5.2% of ATP last month, a decrease from 5.6% in August 2021 and well below the 10.0% of ATP recorded in September 2020. KBB reports that Porsche, Land Rover, Genesis, Subaru and Toyota had among the lowest incentive spend last month, all 3% of ATP or lower. Meanwhile, Alfa Romeo, Buick, Fiat and INFINITI each had incentive levels above 10% of ATP.
Luxury Vehicle Sales
KBB attributes the continuing rise in average new vehicle prices in large part to strong luxury vehicle sales. Luxury sales last month accounted for 16.6% of total market sales, up from 15.1% in September 2020. In fact, luxury share in September was among the highest in the past decade, and KBB says luxury buyers paid an average of $60,845 for a new vehicle last month. Researchers also add that many luxury brands, notably Acura, Cadillac, Genesis and Mercedes-Benz, achieved year-over-year ATP gains in excess of 20%. Cadillac, for example, saw ATPs jump up more than 32% last month, reaching $81,939. Consumers continue to pay near $100,000 for a new Cadillac Escalade. Cadillac sold more than 3,500 Escalades in September 2021, a jump of more than 50% from August 2021.
Photo Credit: Photo Credit: Julia Shamayaeva/Shutterstock.com