New Car Prices Climb 13% Amid High Demand, Low Inventory
Limited supply and increased demand leave consumers paying more on average for new cars.
Written by Julian de Sevilla
Reviewed by Kathleen Flear
People are paying more for new cars on average than they were a year ago. These price hikes are due in part to a limited supply of vehicles, as well as an increase in the sale of luxury cars.
According to
data from Kelley Blue Book
, consumers have paid more than the manufacturer’s suggested retail price (MSRP) for new vehicles for the last 11 months. A year ago, cars sold for an average of $1,000 under MSRP. But new Honda, Land Rover, and Mercedes-Benz buyers in April paid between 5.8% to 8% above MSRP on average. Compare insurance quotes from 50+ carriers with Jerry in under 45 seconds
Compare insurance quotes from 50+ carriers with Jerry in under 45 seconds
4.7/5 rating on the App Store | Trusted by 5+ million customers and 7 million cars4.7/5 app rating | Trusted by 5M+ driversCars cost more than they did a year ago
People buying new cars paid an average of $46,526 in April 2022. This represents a 0.7% increase from March 2022 and a 13% increase from April 2021.
Non-luxury vehicles sold for an average of $42,509 in April, averaging $862 above MSRP.
Meanwhile, the average price of a luxury vehicle slightly decreased to $65,620 from March to April, though this remains $1,865 above MSRP. A year ago, luxury vehicles sold for $1,850 under MSRP.
Luxury cars made up 17.4% of new vehicle sales in April, up from 16.7% in March. To note, this brings the overall average transaction price of new vehicles up.
"High prices, a lack of inventory, few incentives—the market is changing, pushing many would-be buyers to the sidelines and forcing others to order from future stock. We expect new-vehicle affordability will be a challenge for the foreseeable future," said Rebecca Rydzewski, a research manager with
Cox Automotive
.The average price of electric vehicles is decreasing
Electric vehicles are a notable exception to this expensive trend. As more affordable models like the Chevrolet Volt and Kia EV6 become popular, the average price of EVs is decreasing. This is still a minor market dominated by expensive vehicles, though, and average prices remain over $65,000.
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