New vehicle transaction prices continue to move higher in part because more affordable sedans are capturing a smaller share of the market.
Source: Kelley Blue Book
The average new-vehicle transaction price (ATP) continued to climb to a record in December 2021 reaching $47,077, according to new data released Jan. 11 by Kelley Blue Book.
Prices are up sharply year-over-year, up nearly 14% ($5,742) from December 2020 and up 1.7% ($808) from the previous month. New vehicle inventory remains tight, and with enough consumer demand, dealers continue to keep prices at or above the manufacturer’s suggested retail price (MSRP).
While prices were at record highs last month, the pace of sales remains historically slow. However, sales spiked to 1,219,034 units in December 2021, after a six-month decline and hitting an all-time low for the year in November.
“December is typically the best month for luxury vehicle sales, and 2021 has followed that trend conspicuously,” said Kayla Reynolds, analyst at Cox Automotive. “The result was another record for average transaction prices overall, driven entirely in December by an increase in luxury vehicle sales.”
Luxury vehicle sales, which typically increase in November and December, account for 18.4% of total sales in December 2021, helping drive ATP higher. By comparison, luxury sales accounted for just 17% of the market six months ago in June, and five years ago in December 2016, luxury sales accounted for only 15.5% of the US market. In December 2021, the average luxury buyer paid $64,864 for a new vehicle, a record-setting $1,300 more than the sticker price. By comparison, luxury cars were selling for more than $3,000 according to MSRP a year ago.
The average price paid for a new non-luxury vehicle last month was $43,072, down slightly from the record high set in November 2021 but still $900 more than list price. In each of the past six months, the average price paid by consumers was higher than the MSRP.
New vehicle transaction prices continue to move higher in part because more affordable sedans are capturing a smaller share of the market. In December 2021, on average cars ($42,460 ATP) were more affordable than new SUVs ($46,075 ATP), vans ($55,049 ATP) and vans ($46,908 ATP). However, the auto market share hit one of its lowest levels ever of 22.7%. Meanwhile, the car market share in December 2018 was nearly 30%. Cars also have a higher offer at 4.5% in December 2021, expressed as a percentage of ATP. Overall, industry incentives fell to a record low in December 2021, averaging just 3.9%.
Originally posted on Vehicle Remarketing
