New-car transaction prices continue to climb despite slowing sales, according to Kelley Blue Book. The ratio of incentive spend to transaction price is at its highest point since 2009. Automakers need to moderate production and incentive levels to maintain residual value strength.
The analysts at Kelley Blue Book reported the estimated average transaction price for light vehicles in the United States was $34,143 in August 2016. New-car prices have increased by $871 (up 2.6 percent) from August 2015, while remaining flat from last month.
Don't let new car dealers get down about slowing sales: 19.3% of U.S. adults intend to buy a new car or truck this year! The most recent AudienceSCAN survey showed this stat.
"Although new-car sales growth is slowing, average transaction prices continue to climb across the industry, rising 2.6 percent in August 2016," said Tim Fleming, analyst for Kelley Blue Book. "However, incentives also have steadily climbed, and the ratio of incentive spend to average transaction price is at its highest point since 2009, at 9.3 percent. As we near or pass the peak of new-car sales this year, each automaker will need to moderate production and incentive levels accordingly to maintain residual value strength moving forward."
Dealers need to encourage vehicle shoppers to get on the ball with television (over-the-air, online, mobile or tablet) advertising. According to AudienceSCAN data, New Car/Truck Shoppers are 50% more likely than average shoppers to have taken action after seeing commercials in the past month.
For August 2016, General Motors had the greatest increase of all major manufacturers at nearly 5 percent, highlighted by the Cadillac and Chevrolet brands. Cadillac rose 6 percent, as the new XT5 transacted 8 percent higher than the SRX it replaced. Chevrolet also climbed 6 percent, thanks to a strong month for the Silverado, which had a high mix of 2500 HD and 3500 HD sales.
Dealerships can keep those transactions up with newspaper advertising! The AudienceSCAN study showed 35.6% of New Car/Truck Shoppers took action after reading newspaper (print, online, mobile or tablet) ads in the past month.
Fiat Chrysler also showed significant growth with prices up 3 percent this month. At $36,947, the Chrysler Pacifica minivan is transacting 9 percent higher than the Town & Country it replaced, helping the Chrysler brand's average rise 10 percent. The Dodge brand also is on the rise with a 5 percent increase, driven by the Challenger and Charger models.