In few spaces are the principals of supply and demand more in play than the automotive industry, where demand is strong and supply is down — prices have jumped by more than $2,000.
According to analysts at Kelley Blue Book, the average transaction price — i.e. what the consumer paid — for a new vehicle last month was $2,125 more than May 2020. It’s a 5.4% increase year-over-year, and the hikes are even month to month as they were up 1.2% between April and May this year. Overall, May new vehicle sales rose 36%, according to TrueCar.
The average price paid for a new vehicle hit a new high-water mark in May at $41,263. Increases were pretty much across the board, although not for every automaker. Tesla and Nissan, which were down 8.8% and 0.4% respectively, were the only two with drops.
“Last month’s average transaction price performance highlights an all-time high in year-over-year growth for the month of May,” said Kayla Reynolds, industry intelligence analyst at Cox Automotive. “Many manufacturers reported year-over-year gains in average transaction prices. The largest increase came from Mitsubishi, up 12% from this time last year.”
Some getting bigger money than others
As mentioned, Mitsubishi is seeing the biggest overall jump in average transaction prices with the 12% rise year-over-year. However, Stellantis, Honda and General Motors all enjoyed double-digit leaps in there May results compared with a year ago. Those results include all of their divisions, including the luxury brands.
Ironically, Mitsubishi reported the biggest jump, but it also has the lowest — by far — average price, coming in at $25,221. No other automaker was even in the $20,000 range. The next closest was Mazda ($30,914) then Hyundai/Kia ($31,118).
Conversely, luxury makers Daimler (i.e. Mercedes-Benz), BMW, Tesla and Volvo all topped $50,000 with Daimler the clear “winner” at $65,396. However, just because it cost more, doesn’t mean it saw the biggest jump, as Mitsubishi’s results indicate.
Biggest jumps by percentage
Despite the large gap in average transaction prices for luxury and non-luxury segments in May 2021, non-luxury vehicles had a larger year-over-year price increase at 4.9% (up $1,805), while luxury vehicles climbed 2.9%, or $1,597, from this time last year.
Standard full-size SUVs and pickup trucks contributed to the growth among non-luxury segments, the firm noted. The third and fourth highest-priced models within the segment include the GMC Yukon XL ($79,695) and Yukon ($77,031), both priced substantially above the industry and segment average.
Those full-size vehicles were not only pricey, they also saw year-over-year increases of more than 10%. However, they did score the biggest increase in ATPs compared with last May. That honor went to … minivans? Yup. The station wagons of the ’90s — and beyond — saw their average jump 15.4% with an average price of $42,105, which is almost $6,000 higher than last May. The biggest drops came from high-performance cars at 13.2% and EVs at 10.8 percent.
It’s a seller’s market, and the sellers certainly understand the principle (of supply and demand).