Average October New Vehicle Price to Hit New Record Above $34,000
Americans appear to be prepared to pay whatever automakers want to charge for new sport utility vehicles and pickups. With nearly three-quarters of all new vehicles sold either an SUV or a pickup, the average transaction price in October will top $34,000 for the first time ever.
So say the industry analysts at J.D. Power and LMC Automotive, who issued their forecast for October new car sales on Tuesday. Prices for passenger cars are forecast to rise by 4% year over year to an average of $27,739, while trucks and SUVs are expected to average $36,474, an increase of 3%. The willingness of consumers to pay those high prices for SUVs and trucks has lifted car prices as well, because demand for cars is likely slightly ahead of supply for the most popular vehicles.
Sales of vehicles costing less than $30,000 are forecast to fall 7% to around 46% of all October sales, while sales of more expensive vehicles are expected to rise 6%.
The analysts expect new vehicle sales to reach 1.39 million vehicles in October (down 1.3% year over year) and retail sales to reach 1.13 million vehicles (down 0.9%). On a seasonally adjusted annual sales rate (SAAR) basis, automakers are forecast to sell 17.3 million units this year, a dip of 200,000 compared with the SAAR in October 2018.
Thomas King, senior vice-president of data and analytics at J.D. Power, commented:
Demand for new vehicles remains robust in October, with sales volumes expected to be similar to year-ago levels. While volumes are steady, average transaction prices are up dramatically. In fact, prices in October are on track to be the highest ever, exceeding $34,000 for the first time and up almost $1,300 from a year ago.
The driver of these booming sales is manufacturer incentives that are expected to exceed $4,000 per vehicle in October as the automakers try to clear out last year’s models to make room for this year’s. New 2020 model year vehicles are forecast to account for just 28% of total October sales.
LMC Automotive’s president of Americas operations and global vehicle forecasts, Jeff Schuster, had this to say about the coming year:
With the close of 2019 near, auto sales are expected to be above 17 million units for the fifth straight year. Attention is now shifting to 2020 and, while retail sales are expected to decline for the fifth straight year, the outlook has improved somewhat. Trade risk and vehicle affordability remain top concerns for the coming year, but the economy is expected to remain supportive with growth at a sub-2% level. A higher probability of a recession has been pushed out to 2021 or later.
LMC has forecast total light vehicle (cars, SUVs and pickups) sales at 17.1 million for 2019 and at 16.8 million for 2020.