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Americans Paying Record Prices for New Cars

Used cars not far behind.

by on Jun.02, 2011

Ford has taken three price hikes this year, one reason it had the highest average transaction price of all major makers in May, analysts report.

There are plenty of reasons why new car sales took a tumble last month – everything from a weak economy to a shortage of some popular Japanese vehicles.  But pricing also appears to have been a significant issue, according to industry analysts, with Americans now paying more than ever for new cars, trucks and crossovers.

The average transaction price – what a typical customer actually pays, as opposed to sticker price or the low come-ons you might see advertised – surged to $29,817 in May, according to the data tracking service TrueCar.com.  That was up a full $608, or 2.1%, from May 2010 and an increase of $215, or 0.7% over April of this year.

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Significantly, prices rose sharply even though many buyers began shifting from larger to smaller vehicles in a bid for better mileage, analysts noted.  Traditionally, U.S. motor vehicle prices are closely linked to the size of an automobile.

And while some potential buyers are rethinking their options, used car prices also are heading skyward.

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Ford Raises Prices – Again

Consumers getting socked this spring.

by on May.31, 2011

Ford has now raised prices on products like the new Explorer three times since January.

It’s a tough spring for U.S. car buyers.  Not only are many popular models in short supply but prices are heading up – fast.

The latest maker to bump up sticker prices is Ford, which says it will tack another $124, or 0.4%, onto the sticker of its average model.  That might not cause much pain were it not for the fact that it’s the third time since January Ford has raised prices, its average vehicle now costing $375, or 1.3%, more than at the end of 2010.

Ford officials point the finger at steel, rubber and other commodities, where costs have risen sharply in recent months.

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Most major makers have been raising prices this year, in part due to commodity price hikes but also because the industry is finally trying to regain some pricing momentum after several years of painful restraint.  Manufacturers were loath to risk angering consumers during one of the worst sales downturns since the Great Depression.

“This time, the price hikes are likely to stick,” said Rod Lache, analyst with Deutsche Bank.

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Auto Prices Spiking as Incentives Tumble

Japanese parts shortage masks other increases.

by on May.16, 2011

Prices of the old Honda Civic were rising even before the launch of the 2012 model.

Good new or bad, it depends on whether you’re making or selling a car, but one thing indisputable is that the price of the typical new car, truck and crossover has been rising fast this year.

Motorists, used to finding great deals during a long and deep recession, will likely be surprised to see vehicles not just costing more than a year ago, but in some cases several thousand dollars more than just a few months ago, based on industry tracking data.

The biggest and most immediate factor is the vehicle shortage created by the natural disaster that struck Japan on March 11.  But makers are also beginning to pass on some of the higher costs they are paying for essential commodities and – in some cases, simply betting that an improving U.S. automotive market will allow them to reduce incentives and raise prices.

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“The current environment will set the industry up for very strong pricing,” said Rod Lache, auto analyst with Deutsche Bank. In April, he estimated, U.S. automakers were already getting from $700 to $1,000 more than they did the year before.

The makers will take the extra money any way they can, though they have generally held back on outright price increases.  Toyota, for example, put in place a relatively modest hike, at the beginning of May, running to just over 2%.  But according to data from TrueCar.com, some of the maker’s models, such as the Prius, are delivering Average Transaction Prices, or ATPs, of as much as $3,000 more than what they went for at just the beginning of 2011.

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