New car prices continue to climb, now averaging nearly $ 47,100

  • Remember last spring when the shocking news was that the average price of new cars hit 40,000? Good time.
  • KBB calculated that the average price of a new car in the United States in December was $ 47,077. That’s against $ 46,329 in November.
  • You probably already know the reasons for this: the COVID-19 pandemic, supply chain issues and a shortage of chips, as well as the automakers who have decided to build their models at higher profit in times of scarcity.

    It was certainly a novelty in the summer of 2021 when the average price of a new car crossed above the $ 40,000 threshold, but now that we are in 2022, car buyers would probably like to see these numbers on their car sticker. That’s because the average price of new cars in the United States in December rose to $ 47,077.

    The new average was noted by Kelley Blue Book, who also calculated a surprisingly rapid rate of increase in car prices over the past three years. The average price rose from just under $ 1,800 in 2019, then just over $ 3,301 in 2020, then an incredible $ 6,220 in 2021. That’s the kind of rate. increase that brings you to new car prices reaching $ 47,077 in December after climbing to $ 46,329 in November.

    “Today’s environment is essentially unprecedented for the modern auto industry; we have never been in a situation before where demand truly exceeds the supply of new vehicles, said Stephanie Brinley, analyst at IHS Markit. Car and driver. “This has created a new pricing dynamic which ultimately translates into an increase in the average reported transaction prices. “

    KBB says the two main drivers of this price increase are reduced supply and increased demand, which were caused in part by the pandemic and the associated chip shortage. But car dealers and manufacturers are also benefiting from the situation. Brinley said cars have become more expensive in recent years thanks in part to new technological features, as well as more standard content in entry-level vehicles.

    On the automaker side, we’ve been hearing for months that with a shortage of chips limiting the number of vehicles they can build, companies have shifted production to high-profit models, which means more cars on the market. more lots were the more expensive trims and models. This meant that buyers looking to buy were faced with inventory that was priced higher than expected.

    Spencer plattGetty Images

    “Higher feature content has been a trend for several years, but in a situation where demand exceeds supply, some automakers have chosen to prioritize the production of higher margin vehicles, which may change the range of vehicles available and help increase transaction prices. whether or not the MSRP is changed, ”said Brinley.

    Dealers have also done their part by not offering the types of discounts buyers are accustomed to and in some cases adding several thousand dollars in “market adjustment” to the price of a new car. KBB notes that dealer incentives in December – a period traditionally good for luxury vehicle sales – were at their lowest in about five years.

    “Lack of inventory has also allowed automakers to generally reduce incentive levels, which may also contribute to higher average transaction prices,” Brinley said. “Plus, dealers ultimately set the price the consumer pays. When supply is less than demand, dealers may price higher than the MSRP, also increasing average transaction prices. “

    We noticed recently that used car prices were also on the rise, with the average used car costing over $ 27,500 in December 2021. It’s a similar story for used electric vehicles, where prices today are almost 27% higher than they were in March 2021. This increase is due, in part, to the same factors that push up the prices of all vehicles, as well as to the “frequent and silent price increases” that Tesla has given to its new cars over the past year, according to a new electric vehicle trends report from Recurrent, which tracks information on used electric vehicles.

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