Car sales are up, but so are prices
The good news is, car sales are soaring. Most automakers have already聽,聽leaving analysts' expectations in the dust.
The bad news is, that means demand for cars is high. And when demand is high, so are car prices, making good deals hard to find.
Transaction prices are up
According to聽, transaction prices for most聽brands crept up between September 2011 and September 2012. The rise was steepest at Hyundai/Kia, where last month's average sale price was $22,245 -- a very impressive 5.8% above last year.聽, Toyota, and Nissan also edged north, with price gains of 2.4%, 1.9%, and 1.5%, respectively.
In fact, the only automaker that saw transaction prices decline was General Motors, which fell a modest 0.7%.聽
Across the board, the average transaction price last month was聽$30,282, up聽0.9%聽from September 2011.聽
Transaction prices represent a complex mix of factors, including base vehicle prices, trim packages and add-ons, as well as rebates and other incentives. For example,聽average transaction price rose, in part, because it's recently released a number of new and updated models. The prices for those vehicles -- and the various bells and whistles that come with them -- have risen, lifting the final price.
Incentive spending is down
There are any number of reasons to explain the surging demand for autos in the U.S., including economic optimism, low borrowing rates, looser credit restrictions, and pent-up demand following the Great Recession. But however we choose to rationalize it, one thing's for sure: today's聽automakers don't need to offer many incentives聽to lure customers into showrooms.
Not surprisingly, Hyundai/Kia has been offering the fewest incentives for shoppers (which helps to explain why the company's average transaction price has remained so high). Last month, the company spent $1,294 on rebates and other incentives, or about 5.8% of transaction value.
At the other end of the scale, we find聽, which spent $3,256, or 11% of its average sale price, on customer incentives. That may seem logically contradictory -- after all, why would a company whose sales are up聽聽need to offer such high incentives?
Part of the reason is that Chrysler has been offering incentives for some time now, and customers have come to expect them. Eliminating them would've dented the company's sales stats.
But a bigger reason might be that Chrysler has been introducing some highly anticipated vehicles over the past year, including the聽聽and variants of the聽. Incentives bring curious customers onto the lots to see those vehicles. Once sales of those vehicles stabilize and consumer awareness levels off, we'd expect to see incentives slide. (In fact, we're already seeing that: Chrysler's incentives have dropped 0.6% from this time last year.)
Bottom line
For shoppers, the data is pretty clear:聽聽are going to remain expensive, thanks to high sticker prices, with plenty of add-ons to lift those prices further and few incentives to bring them down. As the U.S. economy continues to recover -- and as automakers develop new, high-tech safety and infotainment options -- transaction prices may continue to climb.
Are you in the market for聽?聽What's your plan for saving money? Are you looking at discontinued models? Something from the 2012 model-year? Going easy on the add-ons? Or will you opt for a "new used" vehicle that's a year or two old?聽
