New vehicle prices in the United States reached another all-time high in August 2021, for the fifth consecutive record-setting month thanks to an average transaction price of $43,355—up nearly 10% ($3,789) from August 2020 and up 1.6% ($685) from last month, according to Kelley Blue Book.
“Yet the all-time-high prices also accompanied the fourth straight month of a slowed sales pace,” said KBB in a news release. “After a frenzy of strong sales in the spring, the pace of automobile sales slowed again in August 2021 as car shoppers faced limited inventory, high prices and historically low incentives.”
Total sales last month reached only 1,092,302 units, which is among the lowest monthly total in a decade. It is also the lowest volume since April 2020, right when the COVID-19 crisis initially shut down U.S. businesses.
Incentive spending is down to 5.6% of the average transaction price last month—down from 5.9% in July 2021 and significantly below the 10.1% of ATP recorded in August 2020.
OEMs with the lowest incentive spend last month (less than 4% of ATP) include Porsche, Genesis, Land Rover and Subaru. In comparison, Alfa Romeo, Buick and Infiniti each had incentive levels at more than twice the industry average.
“The automotive industry is still reeling from the extraordinary circumstances of the last year and a half, setting new records seemingly left and right,” said Kayla Reynolds, an analyst for Cox Automotive.
Reynolds said the ongoing inventory challenges coupled with historically low incentive spending created a situation where “car shoppers end up being the ones paying the price, quite literally,” while new car prices just continue to climb, month after month.”
KBB said average transaction prices in August were driven higher thanks largely to strong luxury vehicle sales, which accounted for 16.2% of the total market—an increase of 14.4% of total sales in August 2020. Last month, consumers paid an average of $58,766 for a luxury vehicle. KBB said many luxury brands, notably Acura, Cadillac, Genesis, and Mercedes-Benz, all achieved year-over-year ATP gains of more than 20%.
“Cadillac, for example, saw ATPs jump up more than 32% last month, reaching $74,332,” said KBB. “Consumers continue to pay nearly $100,000 for a new Cadillac Escalade, and more than 2,000 new Escalades were sold in August.”
The company also states that nearly every brand experienced YOY price increases last month—with the exception of Fiat and Porsche.
“Porsche continues to deliver the industry’s highest ATPs, at $96,344 in August, but saw prices drop marginally (less than 1%) on lower sales of the brand’s most expensive sports cars, the 911 and Taycan,” said KBB, adding that Porsche incentives (measured in relation to ATP) are the lowest in the industry.
Fiat on the other hand sold the most affordable vehicles in the market, with the average transaction price for a new vehicle last month below $27,000—the lowest in the industry. Fiat ATPs were down 5% from August 2020; the brand also sold only 128 units last month.
As for electric vehicles, prices declined YOY in August, as new entries like the Chevrolet Bolt EUV, the Ford Mustang Mach-E, and Volkswagen’s ID.4 helped drive down average EV prices from $57,346 to $49,938 YOY.
“Even the hyper-expensive Porsche Taycan was less hyper-expensive in August 2021,” said KBB. “A year ago, the average buyer of the Porsche super electric was paying $152,509. Last month, the ATP fell to $123,371, a drop of 19% year-over-year.”
In comparison, sales of the popular Tesla Model Y jumped 3.7% YOY in August with an ATP of $58,966.
* Kelley Blue Book average transaction prices do not include all applied consumer incentives. ** Tesla Motors did not wholly report price numbers for their model lineup. This heavily skewed the manufacturer’s average transaction price comparisons year-over-year and month-over-month.
