An average new car costs $45,000 in the US. Consumers have witnessed the increasing price tag for six months in a row now.
The last month’s increase in car prices marked the sixth record in a row, with the average new car costing $45,031. On Tuesday, the data revealed from the Kelley Blue Book and Cox Automotive showed, it is the first time in history a car price has crossed $45,000. It began with $40,000 in the last quarter of 2020 and increased up to $42,000 in June 2021.
On average, from last September to the current year September, the average new car price increased to 12.1 percent, making it $4,872 in terms of dollars. The 3.7% increase solely happened after August 2021. However, unlike the first quarter of the year when car buyers stormed the dealerships following the lock-down, this time, the reason is not the same for the increase in prices.
As per the recent data, car sales have declined from August 2021 to September 2021 by 7.3%. This makes sense as the Q3 chip shortage has stopped the production of new cars, leaving dealers without any new cars to offer. While brand new cars are still not widely available, the major chunk of the increase in sales is driven by pickup cars, SUVs, and luxurious cars – KBB’s reported.
Earlier at the beginning of the years, high demand and low supply for cars fuel the car manufacturers‘ profits.
Cars that have not made it to consumers’ homes include hatchbacks, standard, and other affordable vehicles, while the luxury cars sales boosted by 15.1% compared to the previous year. Last month, premium cars made an overall sale of 16.6%. Moreover, as per the KBB estimates, the luxurious car shares rose to the highest it has ever been in the past decade. An average luxury vehicle costs $60,845, increasing the gross average new vehicle price.
The high car prices contribute to the lack of cash and other incentives provided by the carmakers to make cars affordable for new car buyers. Previously, cash companies used to knock off the car prices to make a deal favorable for the buyer. However, with current market conditions and low inventories, the cash companies don’t feel the need to lure the customers with incentives to buy. The data received recently witnessed that the incentives spendings dropped by 5.2%, which previously would be 10% to help the customer get a car.
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