In what has become a become a familiar refrain in the automotive world, the average transaction price of a new vehicle set a new record of $48,182 in July 2022, surpassing the previous high of $48,043 set in June.
July prices rose 0.3%, or $139, from June 2022 and a whopping 11.9%, or $5,126, from July 2021, according to Kelley Blue Book.
The prices rose despite an improving inventory picture, with dealers holding above a 30-day supply of new vehicles on average, a level that has remained constant since the end of last year. With roughly 1.1 million units in dealer inventory in the U.S. at the end of July, inventory was 27% higher than it was in 2021, but is still drastically below levels seen in 2019 and 2020.
“It’s still a sellers’ market,” said Rebecca Rydzewski, research manager of economic and industry insights for Cox Automotive. “New-vehicle inventory levels are better than a year ago, but remain historically low, and that’s keeping new-vehicle prices elevated.”
Uneven pricing strength
Yet the demand for new vehicles isn’t affecting every brand evenly, according to Rydzewski.
“Even though average prices are at a record level, there are affordable vehicles out there. Compact cars, SUVs and subcompact models typically transact for 30% to 40% below the industry average.”
According to KBB, Honda, Kia, Land Rover and Hyundai all sold cars last month for 5% to 8% more than the manufacturer’s suggested retail price. In contrast, smaller Italian manufacturers Alfa Romeo and Fiat, as well as Ram, Volvo, Lincoln and Buick, demonstrated the least price strength, selling 1% or more below MSRP last month.
But the picture differs when comparing year-over-year price increases.
Tesla’s average transaction prices rose 20.5% from July 2021, the most of any automaker. It was followed by Porsche at 18.9%, Honda at 18.4%, Jeep at 16.6%, Mitsubishi at 16.3%, Acura at 15.6%, Kia at 14.4%, Infiniti at 13.7%, Chrysler at 13.3% and BMW at 13.1 percent.
Other automakers saw their average transaction prices rise little if at all year over year.
Mercedes-Benz’s prices dropped 7.6% versus those of a year ago, the most of any automaker. Similarly, Cadillac’s prices are 6.4% lower than a year ago, while Polestar declined 5.7%, Fiat dropped 1.9% and Lincoln dropped 0.2 percent. Other automakers reported modest increases in July versus a year ago, including Genesis at 0.9%, Subaru at 2.4%, GMC at 2.6%, Mini at 2.7%, Audi at 2.9%, and Chevrolet at 3.7 percent.
How much more are they paying?
On average, consumers paid $44,431 for a new non-luxury vehicle in July, up $363 from June and breaking the previous record for non-luxury automobiles, and $875 over sticker price. While that’s down from the previous month, customers are still paying more than they did a year ago, when they paid 0.8% less than MSRP.
The typical luxury buyer spent $65,530 for a brand-new car in July, $382 less than previous month when average luxury transaction costs reached a record high of $65,912. Luxury purchasers continue to pay more than MSRP for new cars, but they’re trending closer sticker prices. However, luxury vehicles were selling for $386 under MSRP a year ago.
That said, premium car share remains historically high, which is driving the overall industry average transaction price higher.
What’s most striking is the average price of an electric vehicle, which remains a plaything of the rich. The average price paid for a new EV is $66,645, more than the average luxury vehicle. While that price declined 2.3% from June 2022, it’s 18.8% more than a year ago. So much for EVs becoming more affordable.
Year-over-year, small and midsize pickup prices dropped the most, declining 0.9% according to Kelley Blue Book. Electric vehicle prices increased the most, rising 18.8%, most likely driven by Tesla.
The least expensive vehicles, subcompact cars, now average $23,220, while the most expensive, high-end luxury cars, average $119,496.
And incentives remain meager, accounting for 2.4% of the average price paid, and down from 5.9% a year ago. Kelley Blue Book stated full-size cars and luxury cars had the highest incentives in July, while high-performance cars, full-size luxury SUVs, and electric vehicles had the lowest.