Luxury market prices creep up amid continuing supply woes

Luxury vehicles led the way for price increases last month, but retail prices have become less affordable across the board due to continued supply issues. New-vehicle average transaction prices (ATPs) increased to $46,526 in April 2022, according to new data released by Kelley Blue Book. Prices rose 0.7 per cent ($304) month over month, and remain elevated compared to one year ago, up 13.0 per cent ($5,354) from April 2021.

According to the new report, the supply-side issues remain, with new-vehicle inventory days’ supply in the low 30s in April, with high customer demand persisting. Most dealers have been able to continue selling inventory at or above MSRP numbers, for instance, for April, new vehicles from Honda, Land Rover and Mercedes-Benz were going on average between 5.8 per cent and 8.0 per cent over MSRP. Though this rise is not constant across brands; Fiat, Lincoln and Ram were selling around one per cent below MSRP.

“For nearly a year now, we’ve seen new vehicles transacting above suggested retail prices,” said Rebecca Rydzewski, research manager of economic and industry insights for Cox Automotive. “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 and wait. We expect new-vehicle affordability will be a challenge for the foreseeable future.”

The luxury market has seen the highest retail price increases. The average price paid for a new non-luxury vehicle last month was $42,509, up $186 from March, with buyers paying, on average, $862 above sticker price. One year ago, non-luxury vehicles were selling for more than $1,000 under MSRP. The average luxury buyer, however, paid $65,628 for a new vehicle, down $4 month over month and still $1,865 above sticker price. For comparison, luxury vehicles were selling for $1,850 under MSRP one year ago.

Luxury vehicle share rose to 17.4 per cent of total sales in April, up from 16.7 per cent of total sales in March but still down from 18.4 per cent in December 2021, when the average transaction price for a new vehicle hit a record high of $47,064.

New-vehicle average transaction price changes month over month by segment saw all segments increasing except cars, a reversal of March. With an ATP of $55,210, trucks saw the largest increase of $621. With an ATP of $47,731, vans saw an increase of $136 in April, while SUVs increased by $391 to an ATP of $45,290.

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