Consumers paid an average price of $48,301 in August 2022 for their new vehicle, according to Kelley Blue Book.
Not only is that a record high, it’s a 10.8%, or $4,712 increase from August 2021, and a 0.5%, or $222 increase from July. It’s the fifth consecutive month of rising prices for new vehicles.
Some of the increase can be blamed on continued tight inventories. During the summer, new-vehicle inventory supply was unchanged, remaining in the middle to upper 30-day supply range, about half of what is considered average.
However, days’ supply in August was 43% higher than the same period in 2021, when inventory constraints first impacted the market. Even so, the number of new vehicles on the U.S. market is 1.2 million units, considerably lower than in 2020 and 2019. With barely 1.1 million units sold on average per month in 2022, new car sales are still low; sales averaged 1.4 million per month during the first eight months of 2019.
Which brands command premiums
And new vehicles continue to command strong pricing, with vehicles selling above manufacturers suggested retail price. The market’s strongest price performers — Hyundai, Land Rover, Honda and Kia — saw transactions 5% to 9% above sticker. At the other extreme were Alfa Romeo, Fiat, Ram, Volvo, Lincoln, Buick and Volvo, all of which sold 1% or more below MSRP in August. Naturally, the brands with the most days’ supply of vehicles are also those with the lowest pricing strength.
“Prices are still high and climbing incrementally every month,” said Rebecca Rydzewski, research manager of economic and industry insights for Cox Automotive. “New-vehicle inventory levels have been rising through August, now reaching the highest level since June 2021. However, supply of popular segments — like subcompacts, hybrids and EVs — still remain very low. Automakers are focusing on building and selling high-margin vehicles. Essentially, the product mix is the primary factor keeping prices high.”
Prices continue to climb
The average cost of a new non-luxury car in August was $44,559, a record for the segment and an increase of $132 from July. On average, mainstream car buyers spent an average of $1,102 above sticker price, 2% more than a year prior. One bit of good news: mainstream truck consumers spent $142 less than sticker.
The average luxury buyer paid $65,935, up $878 from the prior month’s 65,057. Luxury buyers continue to pay more than MSRP for new vehicles, although prices are trending closer to sticker prices.
Luxury vehicle market share remains historically high, although share decreased to 17.5% of total sales in August from 17.7% in July. The higher share of luxury sales is contributing to the overall industry’s higher average transaction prices.
Electric vehicle buyers are paying even more, on average, than luxury vehicle buyers. At $66,524 in August, prices have risen 1.7% from the $65,386 paid in July, and are up 15.6% from the $57,540 paid during the same period a year ago.
Incentives remain low
Lack of inventory has also led to decreased incentives. At only 2.3% of the average purchase price, incentives were historically low in August compared to 5.5% in July 2021. But they do exist, with the largest incentives in August found on full-size and luxury cars. Meanwhile, the lowest incentives were found on high-performance cars, vans, and electric vehicles.
As you might expect, brands with higher vehicle stock levels provide the bigger incentives, including Stellantis brands, which had higher-than-average inventory and incentives in August, averaging 4.4% of transaction price, up from 4.1% in July. Nevertheless, they remained historically low.
This all has a huge impact on monthly payments.
According to credit reporting company Experian, the average monthly car loan payment in the U.S. was $515 for used cars and $667 for new cars in the second quarter of 2022.
Where prices are relatively low
For those looking to spend as little as possible for a new car, average prices were lowest on subcompact cars at $22,680; compact cars at $26,296; subcompact SUVs at $30,452. The most affordable brand in August was Fiat at $23,766, followed by Mitsubishi at $30,393, and Mazda at $34,568.
Interestingly, Toyota’s average transaction price of $38,839 was higher than premium automaker Buick at $38,492. Similarly, mainstream brands are commanding high average transaction prices. While Chevrolet’s $49,010 average transaction price seems high, it’s lower than Ford’s $53,829.
Among luxury automakers, the lowest average transaction prices were found at Alfa Romeo, $53,029; Acura, $53,949; Lexus, $56,255; Polestar, $57,791 and Volvo, $58,783.