The average price for a new vehicle in the United States has now surpassed $38,000, both JD Power & Associates and LMC Automotive report.
Once the sales data for December is collected, the average transaction price for new vehicles sold in the U.S. is expected reach another all-time high, rising to $38,077, a 9% increase from a year ago, the report said.
“This is the first time that average prices have exceeded $38,000 — just one month after prices exceeded $37,000 for the first time in November 2020,” the reported noted.
For context, average transaction prices are 20% higher in December 2020 than they were in December 2015 at $31,849.
The J.D. Power report also noted an increase in luxury vehicles sales in December remains a key driver, coupled with disciplined incentives and discounting, and the shift towards more expensive trucks and SUVs have combined to driven up prices.
Trucks and SUVs are on pace to account for 79% of retail sales of vehicles in the U.S. this month compared with 75% a year ago, the report said.
In addition, low interest rates and higher trade-in values continue to support higher transaction prices and lowered consumer resistance. The average interest rate for loans in December is expected to fall to 4.2%, 97 basis points lower than a year ago.
During the same time frame, the average monthly finance payment is up only $20 to $610. Concurrently, the average trade-in value has risen to $5,626, an increase of $709, or 14.4%, from a year ago. Loan terms are relatively stable with the average term being 69 months, only up one month vs. a year ago.
Despite the pandemic, consumer expenditures on new vehicles are likely to reach all time high of $53.3 billion, up $10.1 billion from December 2019 and $6.6 billion over the previous record of $46.7 billion in August 2019, the report added.
Thomas King, president of J.D. Power’s data and analytics division, said, ““December’s performance closes the year on multiple positive notes. Retail sales are up, transaction prices are at record levels and retailer profits are at all-time highs. This reinforces that manufacturers and retailers are succeeding in getting vehicles built, shipped and sold in alignment with resilient consumer demand,” he added.
Overall, retail sales for new vehicles in December are projected to total 1.4 million units, a 1% increase compared with a year ago when adjusted for selling days. December 2020 contains three more selling days and one more selling weekend than December 2019, according to the monthly estimates prepared by J.D. Power and LMC
Comparing the same sales volume without adjusting for the number of selling days translates to an increase of 13.1% year over year.