The rise in new car prices shows no sign of slowing down, despite a slight increase in supply of new vehicles to the market, according to the newest report from Kelley Blue Book. August prices average transaction prices (ATP) at $48,301, broke the previous record held in July, which was $48,080. August 2022 prices rose 0.5% ($222) month over month from July, and 10.8% ($4,712) year over year from August 2021.
“Prices are still high and climbing incrementally every month,” said Rebecca Rydzewski, research manager of economic and industry insights for Cox Automotive. “New-vehicle inventory levels have been rising through August, now reaching the highest level since June 2021. However, supply of popular segments – like subcompacts, hybrids and EVs —still remain very low. Automakers are focusing on building and selling high-margin vehicles. Essentially, the product mix is the primary factor keeping prices high.”
Inventories are slowly growing, with the days’ supply numbers holding steady in the high 30s range throughout this summer, and is “showing signs of increasing,” according to the company release. August, days’ supply was 43 per cent higher than it was in the same timeframe of 2021, when inventory shortages first started to impact the market. But new-vehicle inventory remains significantly below levels seen in 2020 and 2019. “In the face of tight inventory and high prices, new-vehicle sales remain depressed, averaging just 1.1 million units per month in 2022. For comparison, sales in the first eight months of 2019 averaged 1.4 million per month.”
Hyundai, Land Rover, Honda and Kia continue to show the most price strength in the market, transacting between five and nine per cent over sticker last month. Ram, Volvo, Lincoln, Buick, and Alfa Romeo and Fiat showed the least price strength, selling one per cent or more below MSRP in August.
The average price paid for a new electric vehicle (EV) rose in August by 1.7% compared to July and increased by 15.6% versus a year ago. The average price for a new electric vehicle is over $66,000, according to Kelley Blue Book estimates – remains well above the industry average, aligning more with luxury prices versus mainstream prices.
Incentives decreased slightly in August versus July, remaining historically low at only 2.3% of the average transaction price. A year ago, incentives averaged 5.5% of ATP.
