Almost everyone pays Sticker
Americans are used to negotiating car prices down from what is listed on the window sticker. But in today’s market, almost everyone pays above Manufacturer’s Suggested Retail Price (MSRP).
The average new car sold for 2% above MSRP in October, or about $800 above list price. A year ago, we were spending an average of $2,300 less than the list price.
“Whether desperate or impatient, consumers continue to pay hundreds of dollars above the suggested price for new vehicles,” said Kayla Reynolds, analyst at Cox Automotive. “While the average transaction price hit a new record high, the average incentive package fell to its lowest level in 20 years. To score a new vehicle, buyers accept no-haggle prices, with significant adjustments to market in some cases. It’s absolutely a seller’s market right now.
Cox Automotive is the parent company of Kelley Blue Book.
SUVs and luxury cars sell more
A seller’s market occurs when there is more demand than supply. The total supply of new cars available for sale remains well below historical norms, largely due to a global shortage of microchips that has prevented automakers from building as many new cars as they had anticipated. .
Factories are using the limited supply of microchips they can find to build higher-margin trucks, SUVs and luxury cars. Sedans accounted for 25.7% of the market in October 2019 – the last comparable month before the pandemic. In October, they represented only 21.5% of the market.
Meanwhile, more expensive SUVs accounted for 52.4%, down from 49.1%.
Luxury cars accounted for 16.3% of total car sales during the month. They contributed 15.2% in October 2020.
More Americans are buying a car than a month ago
High prices may have kept some buyers off the market, but it’s hard to know for sure with limited supply. Total new vehicle sales rose 4.1% in October from September. But they remained 22.4% lower than a year ago.
Rare incentives almost everywhere. Almost.
With high prices, dealers are confident they can sell most cars without deep discounts. Incentives accounted for just 4.3% of average new car sales last month, down from 5.6% in September, which was already a historic low.
But the story was not the same on all sales lots. Last month, incentives accounted for less than 3% of the average sale at Genesis, Land Rover, Mazda, Porsche, Subaru and Toyota dealerships. At Alfa Romeo dealerships, bonuses accounted for more than 10% of the average sale.