What is going on with that?
We're well into 2021, and new car prices hit their sixth record in a row. According to Kelley Blue Book and Cox Automotive on Tuesday, the average new car cost $45,031 in September -- the first time this figure has crossed the $45,000 mark in history. That's up from $40,000 at the end of 2020, and up $2,000 from $42,000 in June.
Between September 2020 and September 2021, the new average car price increased by 12.1%, or $4,872. Since August of this year, they've increased by 3.7%, or $1,613. However, unlike earlier this year when new car buyers flocked to dealers following epidemic lockdowns and stay-at-home orders, there's a different reason for the price rises this time around.
According to the data, auto sales actually fell 7.3% from August to September, according to reports. This coincides with research showing that many car buyers are giving up on purchasing cars because of the chip shortage, leaving dealers without enough new cars to sell. High demand and low inventories boosted automaker profits earlier this year. While new cars are still scarce, KBB's latest data shows that luxury car, pickup, and midsize SUV buyers are driving the average price increase in September.
The sales that occurred involved fewer entry-level cars, hatchbacks, and other affordable vehicles, but included more luxury cars whose sales increased 15.1% compared to September 2020. Premium cars made up 16.6% of all new vehicles purchased last month, accounting for 16.4% of total sales. In fact, the share of luxury cars was the highest it's been in the last ten years, according to KBB. And the average luxury car costs $60,845, which adds up to a significant increase in the overall average new car price.
The absence of incentives from automakers has contributed to the higher prices for new car buyers. Usually, cashiers will take off the price to make a deal. With such a slender inventory, there's no need to entice buyers in with cash-back offers or the like in today' '. The latest data shows that incentive spending has fallen to a new low of just 5.2% of saatchi's average transaction price. Automakers would spend 10% on average every year to help sell a car one year ago.
Climb in the driver's seat for the latest car news and reviews, delivered to your inbox twice weekly.