Want proof that new vehicle buyers pay well above MSRP for the limited new-car inventory on dealer lots?
A recent report by Kelley Blue Book (KBB) shows prices rose 13.5%, or $5,613 compared with a year ago. The average transaction price of $47,148 in May was second only to the record $47,202 paid in December 2021.
As widely reported, these record prices have fattened many dealers’ bank accounts, despite fewer overall auto sales. Cox Automotive, the parent company of KBB, forecast a 28% dip in May sales compared to a year ago, but dealer profits still are strong.
“Prices for both new and used vehicles are showing signs of stabilizing, and price growth will likely decline over the course of the summer as the anniversary of the ‘big squeeze’ in inventory passes,” says Rebecca Rydzewski, Cox Automotive research manager. “However, no one should expect price drops, as tight supplies in the new market will hold prices at an elevated level into 2023.”
Industry analysts and economists tell Wards inventories will not stabilize for at least a few years.
Haig Partners reports that average gross profit was $6,244 per new-car sale in first-quarter 2022, 180% higher than during what Haig calls the “pre-chipdemic” of 2019.
Other KBB findings:
- Strong luxury share, at 17.3% of sales, helped push industry average prices higher. Luxury share in May 2021 was 15.9% and even lower pre-pandemic, at 13.1% in May 2019.
- In May, luxury buyers paid an average $65,379 for a new vehicle, down $511 month over month but still $1,071 above sticker price.
- The average price paid for a new vehicle has been “over sticker” throughout 2022. In May, new vehicles from Honda, Land Rover and Mercedes-Benz were transacting on average between 6.1% and 9.3% over MSRP. On the other side of the spectrum, Buick and Lincoln were selling at nearly 1% below sticker.
- The average price paid for a new non-luxury vehicle last month was $43,338, up $709 from April. Car shoppers in the non-luxury segment paid on average $1,030 above sticker price. Consumers paid more than MSRP in each month of 2022, whereas one year ago, non-luxury vehicles were selling for more than $400 under MSRP.
- The average price paid for a new electric vehicle dropped again in May compared to April, as lower-priced models entered the market and offset the many luxury EVs already available. The Chevrolet Bolt, with an average transaction price below $40,000, is available on dealer lots 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. Still, the average price for a new EV – over $64,000, according to Kelley Blue Book estimates – is well above the industry average and more aligned with luxury prices than mainstream prices.