{"id":205958,"date":"2021-07-20T12:14:53","date_gmt":"2021-07-20T16:14:53","guid":{"rendered":"https:\/\/www.thedetroitbureau.com\/?p=205958"},"modified":"2021-07-20T12:14:54","modified_gmt":"2021-07-20T16:14:54","slug":"new-vehicle-prices-set-all-time-record-with-no-end-in-sight-to-rapid-rise","status":"publish","type":"post","link":"https:\/\/thedetroitbureau.com\/2021\/07\/new-vehicle-prices-set-all-time-record-with-no-end-in-sight-to-rapid-rise\/","title":{"rendered":"New Vehicle Prices Set All-Time Record, With No End in Sight to Rapid Rise"},"content":{"rendered":"\n

New vehicle prices continued an unprecedented rise last month, the upward jump reflecting a variety of factors, including ongoing inventory shortages triggered by the pandemic and problems sourcing critical semiconductors.<\/p>\n\n\n\n

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Prices on new vehicles are at an all-time high. The average prices of a new vehicle in June was $42,258, according to KBB.com analysts.<\/figcaption><\/figure><\/div>\n\n\n\n

The typical new vehicle buyer laid out an estimated $42,258 in June, according to Kelley Blue Book. That was up $928 from May, and $2,527 \u2013 or 6.4% \u2014 from June 2020.<\/p>\n\n\n\n

“New-vehicle affordability continues to decline as the income required to purchase the average new vehicle continues to climb,\u201d said Kayla Reynolds, industry intelligence analyst at Cox Automotive.<\/p>\n\n\n\n

Price surge hitting new and used vehicles alike<\/h2>\n\n\n\n

The recent surge in pricing<\/a><\/span><\/strong> has been one of the most dramatic in the last half century, with only a few exceptions, notably during the inflation-plagued era of the late 1970s and early 1980s. To put the latest surge into perspective, the typical new vehicle price was around $36,000 at the end of 2019, according to manufacturer data.<\/p>\n\n\n\n

And the runup of new car prices, along with the lack of inventory, is hammering used car buyers, as well, with prices for most previously owned products now at record levels, according to industry data. In a number of instances, used products are now going for more than they did when new. And even vehicles with more than 100,000 miles<\/a><\/span><\/strong> on the odometer are in high demand and commanding record prices, TheDetroitBureau.com reported earlier this month.<\/p>\n\n\n\n

\u201cThere are a lot of reasons why prices keep going up,\u201d said Stephanie Brinley, principal auto analyst with IHS Markit, \u201cthough the pace may settle down\u201d in the coming months.<\/p>\n\n\n\n

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The rise in new vehicle prices isn’t just because of wildly popular trucks and utility vehicles \u2014 midsize sedan prices jumped big last month.<\/figcaption><\/figure><\/div>\n\n\n\n

Low inventories play a primary role<\/h2>\n\n\n\n

Automakers have been hit hard by rising prices for both raw materials and components, said Brinley, though a more severe problem has been the shortage of new vehicle inventory.<\/p>\n\n\n\n

Manufacturers were forced to temporarily halt operations in many countries in spring 2020 due to the COVID-19 pandemic lockdowns. As they were racing to catch up later in the year, however, automakers found themselves facing severe shortages of the microchips used for everything from engine control modules to digital infotainment and safety systems. That has led to frequent factory slowdowns and closures this year.<\/p>\n\n\n\n

\u201cWe came into the year with very, very limited inventory,\u201d and due to \u201cthe chip-related shortages we\u2019ve remained at that low level,\u201d Duncan Aldred, the head of the GMC brand, said<\/a><\/span><\/strong> during a Monday media webinar.<\/p>\n\n\n\n

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Although sedan prices did jump, the demand for expensive SUVs and pickups continues unabated, which also drives the numbers up.<\/figcaption><\/figure><\/div>\n\n\n\n

As a result, both manufacturers and retailers have been far less willing to cut deals. Factory incentives, in particular, have been plummeting. They typically vary by region, but Ford offers a few examples of the current, downward trend. In New York, it currently offers a $3,000 \u201ctrade-in assistance\u201d package for buyers of the 2021 Escape crossover. That will drop to $500 at the end of this month. Across the country, Ford is cutting back trade-in incentives for the F-150 pickup by 60%, from $2,500 to just $1,000.<\/p>\n\n\n\n

\u201cIn June, for the first time in a decade, vehicle buyers were essentially paying sticker price \u2014 the manufacturer’s suggested retail price \u2014 for new vehicles,\u201d said KBB\u2019s Reynolds.<\/p>\n\n\n\n

Buyers also catch some of the blame<\/h2>\n\n\n\n

New car buyers catch some of the blame for rising prices, however. By the millions, they continue to shift from sedans and coupes to the higher-priced SUVs, CUVs and pickups that now account for more than two-thirds of the U.S. new vehicle market. And they continue loading up with more options, while upgrading to more premium trim packages, industry data indicate.<\/p>\n\n\n\n

Fully 50% of GMC buyers are now opting for the brand\u2019s top-line Denali and AT4 models on product lines where they\u2019re available.<\/p>\n\n\n\n

Every manufacturer but Tesla showed an increase in new vehicle prices in June compared to a year before, KBB reported. Mitsubishi saw an 18.3% jump, the industry\u2019s highest, with Stellantis up 15.8 percent. The industry average was 6.36 percent.<\/p>\n\n\n\n

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EV prices were down overall last month, led by the fact Tesla didn’t raise its prices at all in June.<\/figcaption><\/figure><\/div>\n\n\n\n

During the past year, some of the biggest price increases hit SUVs and pickups, the market segments that have also seen the biggest increases in demand. Full-size pickups were up 8.7% year-over-year, KBB reported, while prices for midsize SUVs and CUVs rose 6.8 percent.<\/p>\n\n\n\n

Prices tumble \u2014 but only in this one market segment<\/h2>\n\n\n\n

Some shoppers shifted plans in recent months, hoping to get better deals by buying lower-demand products, particularly in the passenger car segment<\/a><\/span><\/strong>. But inventory shortages appear to be catching up with them too.<\/p>\n\n\n\n

In June, some of the biggest price hikes came in the midsize car segment, prices jumping 11.3%, while full-size cars were up 10.5 percent. And minivans, which have been losing market share for several decades, saw a resurgence \u2014 at least in terms of prices which were up an average 17.8% year-over-year.<\/p>\n\n\n\n

Hybrids and other \u201calternative energy\u201d cars experienced a 9% jump in June compared to June 2020. But the only group of products to post a decline in year-over-year pricing was the battery-electric vehicle segment, down by 13.4 percent.<\/p>\n\n\n\n

That reflects the arrival of new, lower cost products, like the Volkswagen ID.4, as well as the industry\u2019s push to hold down pricing to help boost demand for those all-electric models.<\/p>\n","protected":false},"excerpt":{"rendered":"

ew vehicle prices continued an unprecedented rise last month, the upward jump reflecting a variety of factors, including ongoing inventory shortages triggered by the pandemic and problems sourcing critical semiconductors. The typical new vehicle buyer laid out an estimated $42,258 in June, reports TheDetroitBureau.com.<\/p>\n","protected":false},"author":2,"featured_media":202918,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","footnotes":""},"categories":[7,8,1347],"tags":[414,1750,1749,1748,417],"make":[],"post-state":[335],"category_old":[],"acf":[],"_links":{"self":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/posts\/205958"}],"collection":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/comments?post=205958"}],"version-history":[{"count":6,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/posts\/205958\/revisions"}],"predecessor-version":[{"id":205965,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/posts\/205958\/revisions\/205965"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/media\/202918"}],"wp:attachment":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/media?parent=205958"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/categories?post=205958"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/tags?post=205958"},{"taxonomy":"make","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/make?post=205958"},{"taxonomy":"post-state","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/post-state?post=205958"},{"taxonomy":"category_old","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/category_old?post=205958"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}