- According to Edmunds.com, new-vehicle prices are hitting record highs.
- Confident consumers are buying big, well-appointed cars and trucks.
- The larger stickers are helping automakers’ pile up cash.
The auto industry might be looking to a weaker sales year in 2018 after an unexpectedly solid 2017, but there’s a silver lining to the dark cloud of decline.
Americans are spending a record amount of money, on average, to buy new cars and trucks.
“The average price of a new vehicle is expected to hit the highest point in history in December,” consumer auto site Edmunds.com said in a statement.
“Edmunds estimates that the average transaction price of a new vehicle was $US36,495 in December,which is a 3 per cent increase compared to December of 2016 and a 13 per cent increase compared to December of 2012.”
Some automakers are doing better than even that lofty average price; General Motors reported that it was moving metal for an average of $US38,000 in December – and many of those vehicles were well-optioned pickups and SUVs.
“There are fewer buyers in the market right now, but those who are there are not only feeling confident, they’re willing to shell out the extra cash to get a larger vehicle with all the bells and whistles,” Edmunds analyst Jessica Caldwell said in a statement.
“They know what they want and they are willing to accept the higher costs.”
The upward trend in prices has meant that the sales boom of the past three years – and the larger recovery since the Great Recession – has enabled carmakers to amass huge war chests in preparation for a sales slide.
And if the trend holds through a downturn and isn’t offset by too much incentive spending, it could lessen the impact of lower sales on the automakers’ finances. The question then will become whether consumers can tolerate semi-permanent higher prices if the wider economy softens.