Average New-Vehicle Transaction Price Above $41K For First Time. | Story

Here’s the latest update from one of radio’s largest ad categories: the average transaction price of a new vehicle is expected to reach an all-time high of $41,044 for July 2021. Transaction prices are trending to be 17% higher than they were in July 2020. While new-vehicle retail sales for the month of July are expected to grow from July 2020, it is a decline from 2019, according to a joint forecast from J.D. Power and LMC Automotive.

Inventory shortages are the cause for the July sales pace to weaken, but demand drove the average transaction price to over $41K for the first time. Retail sales of new vehicles this month are expected to reach 1,187,300 units, a 3.7% increase compared with July 2020, but an 8.7% decrease compared with July 2019 when adjusted for selling days. Comparing the same sales volume without adjusting for the number of selling days translates to an increase of 7.7% over 2020 and a decrease of 1.4% from 2019.

July 2021 total new-vehicle sales, including retail and non-retail transactions, are projected to reach 1,319,300 units, a 2.7% increase from July 2020 but a 12.4% decrease from July 2019 due to the decline of less-profitable non-retail/fleet sales.

“Inventory constraints, and its divergent effects on vehicle sales, continues to be the key theme for July,” Thomas King, President of the data and analytics division at J.D. Power said in a release. “Too few vehicles in inventory mean the sales pace in July is well below the levels seen earlier this year. Conversely, the lack of inventory is driving the price of the vehicles to record highs as manufacturers and retailers continue to dial back discounts.”

To demonstrate the lack of inventory, King says dealers across the country currently have 932,000 vehicles for sale, compared with 3.1 million two years ago. Vehicle inventory continues to arrive daily, but it is being sold almost as quickly as it arrives. More than 45% of vehicles will be sold within 10 days of arriving at a dealership this month, according to the report. That’s up from 43% in June 2021 and up from only 26% in July 2019. The average number of days a new vehicle sits on a dealer lot before being sold is on pace to fall to a record low of 31 days, down from 75 days a year ago, and down six days from last month.

Manufacturer incentives are trending down. The average manufacturer incentive per vehicle is on pace to be $2,065, a decrease of $2,170 from a year ago and the lowest amount on record for the month of July. Related to the percentage of the average vehicle MSRP, incentives for July 2021 are trending toward a record low of 4.8%, down nearly 5.5 percentage points from a year ago, and the first time on record below 5%.

Strong retail volumes and higher prices mean that consumers are on track to spend $48.7 billion on new vehicles this month, the highest on record for the month of July.

“Total retailer profit per unit, inclusive of grosses and finance & insurance income, are on pace to reach an all-time high of $4,260, an increase of $2,230 from a year ago and the first time higher than $4,000,” King explains. “Grosses have been above $3,000 for three consecutive months. Coupled with the strong retail sales pace, total aggregate retailer profits from new-vehicle sales are projected to be $5.1 billion, the highest ever on record and up an astonishing 216% from July 2019. July is on track to be the third consecutive month for aggregate retailer profits on new vehicle sales to exceed $4 billion.”

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