Luxury segment records record prices for new vehicles – Remarketing

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New vehicle transaction prices continue to rise, in part because more affordable sedans have a smaller share of the market.

Source: Kelley Blue Book

Average Transaction Prices (ATP) of new vehicles rose further into record territory in December 2021 to reach $ 47,077, according to new data released Jan. 11 by Kelley Blue Book.

Prices are sharply elevated from last year, up almost 14% ($ 5,742) from December 2020 and 1.7% ($ 808) month over month. New vehicle inventory levels remain tight and, with sufficient consumer demand, dealers continue to maintain prices at or above the Manufacturer’s Suggested Retail Price (MSRP).

While prices hit record highs last month, the pace of sales has remained historically slow. However, sales volume reached 1,219,034 units in December 2021, after six months of decline and hit the all-time low of the year in November.

“December is generally the best month for luxury vehicle sales, and 2021 has followed this trend significantly,” Kayla Reynolds, analyst for Cox Automotive, said in a press release. “The result was a new record for overall average transaction prices, driven entirely in December by increased sales of luxury vehicles. “

Luxury vehicle sales, which normally increase in November and December, accounted for 18.4% of total sales in December 2021, helping to push up ATPs. For comparison, luxury sales were only 17% of the market six months ago in June and five years ago in December 2016, luxury sales were only 15.5% of the US market. In December 2021, the average luxury buyer paid $ 64,864 for a new vehicle, a record sum of over $ 1,300 above the sticker price. By comparison, luxury vehicles were selling for over $ 3,000 under the MSRP a year ago.

The average price paid for a new non-luxury vehicle last month was $ 43,072, down slightly from the record set in November 2021, but still over $ 900 compared to the sticker. For each of the past six months, the average price paid by consumers was above the MSRP.

New vehicle transaction prices continue to rise, in part because more affordable sedans have a smaller share of the market. As of December 2021, cars ($ 42,460 ATP) on average were more affordable than new SUVs ($ 46,075 ATP), trucks ($ 55,049 ATP) and vans ($ 46,908 ATP). However, the car market share hit one of the lowest levels on record at 22.7%. In comparison, the share of cars in December 2018 was almost 30%. Cars also had higher incentives at 4.5% in December 2021, expressed as a percentage of ATP. Overall, industry incentives fell to an all-time high in December 2021, averaging just 3.9%.

Originally posted on Vehicle Remarketing

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