New car prices are soaring, with no end in sight
The prices of new cars continue to soar—and are showing no signs of slowing. By the end of 2022 an average new car sold for close to a record high of $50,000.
So much so that the trend—driven to a large degree by strong prices for luxury cars—appears unstoppable.
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This trend for cars to sell above sticker price continues in spite of an increase in supply toward the end of 2022—although the increase was not uniform as some brands have a significantly bigger supply of cars than do others.
Indeed, prices have been above sticker price for more than a year, according to Kelley Blue Book which monitors car prices and sales. Prices continue to stay elevated even though both higher interest rates on loans and higher prices are causing sales to slow down.
Slower sales, however, are simply not translating to lower prices.
The average new-car price of $49,507 at the end of 2022 represents an increase of almost 5% over the year. Inflation at the consumer level rose 6.5% over that time.
No signs of a slowdown
Overall prices showed no signs of slowing as the year ended, confirms Rebecca Rydzewski, research manager of industry and economic insights for Atlanta-based Cox Automotive, which owns Kelley Blue Book.
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The prices of luxury cars fell a little in December, but prices for non-luxury cars were up, she explains.
Truck sales were strong
Sales of trucks were particularly strong in December. With many trucks selling for more than $60,000, a new record in prices was all but unavoidable, she adds.
Even incentives offered for electric vehicles and some luxury cars do not seem to be helping to lower the overall average of all sales prices.
Closer look at sales and prices
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Here is a closer look at what is happening to prices and sales in the automotive industry, according to Kelley Blue Book :
• The average price paid for a new non-luxury vehicle at the end of 2022 was a record high of $45,578. That was a sharp jump of $994 just from November alone.
Honda and Kia demonstrated the most price strength with transactions taking place from 5% to 6% over the sticker prices in December 2022.
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• Truck sales were especially strong in December as the average cost of a new truck soared to $59,000.
The top selling vehicle in the United Stats is the Ford F-Series pickup truck. The average price being paid for a new F-Series has climbed so much that it is now in luxury territory at $66,451.
December was the best month of 2022 for Ford, with more than 75,000 F-Series sold.
• The average buyer of a luxury car paid $66,660 for a new vehicle in December. Although buyers are continuing to pay above sticker price, the difference is becoming smaller.
Land Rover and Mercedes Benz were the strongest sellers in the luxury market, selling for 2.5% to 6.5% above sticker price in December.
Luxury brands BMW, Audi, Infiniti, Lexus, Volvo and Lincoln were the weakest in holding their prices, selling 1% or more below sticker price in December.
• The average electric vehicle sold for $61,448, still well above the average price for all types of cars. Electric vehicles dropped sharply in price in December, however, selling as much as 5.5% lower compared with November. For the year, they were 0.6% down in price.
The price drop was largely driven by major price cuts at Tesla, which represents some 65% of the electric vehicle industry segment.
After increasing prices earlier in the year, Tesla reversed course in December, dropping prices significantly.
• Although incentives offered on new vehicles are at historically low levels, they gained in December 2022 to 2.7% of the price of the average sale.
That figure compares with the average incentive package before the pandemic which was as high as almost 11%, according to Kelley Blue Book
