Want proof that new-vehicle buyers are paying well above MSRP for the limited inventory of new cars on dealer lots?
A recent report from Kelley Blue Book (KBB) shows prices are up 13.5%, or $5,613, from a year ago. The average transaction price of $47,148 in May was just behind the record $47,202 paid in December 2021.
As widely reported, these record prices fattened the bank accounts of many dealerships, despite the overall decline in auto sales. Cox Automotive, KBB’s parent company, forecast a 28% drop in May sales from a year ago, but dealer profits are still strong.
“Prices for new and used vehicles are showing signs of stabilizing, and price growth will likely subside over the summer as the anniversary of the ‘big compression’ of inventory maps,” says Rebecca Rydzewski, Cox Automotive Research Manager. “However, no one should expect price drops as tight supply in the new market will keep prices high through 2023.”
Industry analysts and economists say Wards stocks won’t stabilize for at least a few years.
Haig Partners reports that average gross profit was $6,244 per new car sale in the first quarter of 2022, 180% higher than during what Haig calls the “pre-chipdemic” of 2019.
Other KBB discoveries:
- The strong share of luxury, at 17.3% of sales, helped push up average prices in the sector. The share of luxury in May 2021 was 15.9% and even lower before the pandemic, at 13.1% in May 2019.
- In May, luxury buyers paid an average of $65,379 for a new vehicle, down $511 month-over-month but still $1,071 above list price.
- The average price paid for a new vehicle has been “above the sticker” throughout 2022. In May, new vehicles from Honda, Land Rover and Mercedes-Benz were trading on average between 6.1% and 9, 3% above MSRP. On the other side of the spectrum, Buick and Lincoln were selling nearly 1% below the sticker.
- The average price paid for a new non-luxury vehicle last month was $43,338, up $709 from April. Car buyers in the non-luxury segment paid an average of $1,030 more than the list price. Consumers have paid more than MSRP every month of 2022, whereas a year ago non-luxury vehicles were selling more than $400 below MSRP.
- The average price paid for a new electric vehicle fell again in May compared to April, as cheaper models entered the market and outweighed the many luxury electric vehicles already available. The Chevrolet Bolt, with an average transaction price of less than $40,000, is available at dealerships after an extensive recall, and the new Kia EV6 is “selling well,” KBB reports. Even Tesla had slightly lower ATPs month over month in May. Yet the average price of a new EV – over $64,000, according to Kelley Blue Book estimates – is well above the industry average and more in line with luxury pricing than mainstream pricing.