New Car Prices Spike, Trend Expected to Continue [AUDIO]
New car prices have reached a record high, despite the struggling economy and a nationwide spike in gas prices. In fact, higher prices at the pump could be blamed for the “sticker shock.”
Consumers have been switching from larger to smaller vehicles in a quest for more miles per gallon. However, they have been finding it too hard to give up on the luxuries once offered by their SUVs and minivans (included GPS, OnStar). For that reason, as drivers pick out their favorite gas-efficient vehicles, they also opt for the amenities they can’t seem to drive without.
In March nationwide, the average new car sold for $30,748, two thousand dollars more than a year ago, and an all-time high since TrueCar.com started looking at data 20 years ago.
The switch to smaller, more gas-efficient vehicles increased their demand. When demand is high, manufacturers find no need to offer as many incentives.
While record car prices seem counter-intuitive, TrueCar.com’s Jesse Toprak said he expects the trend to continue for a while, minus a few seasonal dips.
“We’re going to see this trend of higher transaction prices continue to be with us for the next couple of years, at least,” Toprak said.
Consumers who postponed buying a car for the past few years have now returned to the car marketplace. On top of that, manufacturers have become much better at avoiding excess inventory.
Toprak explained, “There’s a much better balance between the production of cars and consumer demand out there.”
Still, Toprak said consumers “have been the winners through this process.” While buyers are paying more, they are getting more, including better gas efficiency.