American consumers can expect to shell out more than $40,000 for a new vehicle, on average. Kelley Blue Book research estimates that the average transaction price per new vehicle in the US for March 2021 to be $40,472. That represents an increase of 4.3% from 12 months previous, or a dollar-figure increase of $1,660.
However, the pace at which new car transaction prices have been climbing may have tapered off. From February to March, the average transaction price actually declined by about 1.5%, or $608.
The steady prices in the auto industry come as US consumer confidence reached the highest level in a year. A Conference Board survey of American households discovered that employment is rebounding and the new stimulus package is expected to drive more home purchases, vehicle purchases, and other higher-priced purchases in the next six months. The consumer confidence index rose substantially more than economists expected, according to Reuters.
An increase in confidence is bound to keep the auto industry performing at levels above forecast. Low inventory levels and challenges in the supply chain have continued to drive immediate purchases as buyers have a “fear of missing out” on incentives and aggressive interest rates that are sure to be rolled back as the belt tightens on days’ supply.
Still, the steadfast pricing average above $40,000 is something to celebrate.
Kayla Reynolds is an industry intelligence analyst at Cox Automotive. She says, “March average transaction prices continued to perform above the threshold of $40,000, even with near-record retail volume last month. The Electric Vehicle category is a segment to watch, as affordable new models continue to roll in and drive down year-over-year pricing.”
Electrification driving prices up
An indisputable reason for prices edging up higher is an increase in EVs rolling out. Carmakers with EVs in their lineup experienced some of the greatest year-over-year average transaction price hikes, since EVs carry a higher price tag.
In all, Volkswagen Group had a 15.4% increase in their average vehicle selling price with Audi and Volkswagen brands both topping a 10% elevation. Hyundai/Kia had a 7.5% increase in average transaction price. Interestingly, Tesla’s average dropped by more than 7% as they lowered pricing on most models this year, although a majority of vehicles they sell exceed the $40,000 bar.
SUVs, trucks, and minivans contribute
This year, Ford’s introduction of the Mustang Mach-E helped to edge up their average selling price slightly, although exceedingly strong performance by the F-Series lineup is sure to have had more of an effect.
Other brands that saw increases include the Stellantis lineup and General Motors, both who have a significant focus on selling high-sticker price models in their truck and SUV ranges.
Although the market for the minivan segment appears to be shrinking, those who purchase minivans are spending more. Average prices have increased from just over $35,000 in March last year to nearly $41,000 just 12 months later.
What seems to be clear in auto retail is a trend toward higher-priced, well-equipped units in the truck, SUV, minivan, and EV segments while those who are budget-conscious or desire a smaller vehicle are striving for the lowest possible price. All automotive segments appear to be flourishing as Q2 2021 is underway, but dealers can make a play for better gross by procuring as much inventory in the mid- to premium-range models. It doesn’t look like consumer confidence will be dropping anytime soon, and sales will follow.
Did you enjoy this article from Jason Unrau? Read other articles on CBT News here. Please share your thoughts, comments, or questions regarding this topic by submitting a letter to the editor here, or connect with us at email@example.com.
Be sure to follow us on Facebook and Twitter to stay up to date or catch-up on all of our podcasts on demand.
While you’re here, don’t forget to subscribe to our email newsletter for all the latest auto industry news from CBT News.