The average price Americans paid for a new car in May was $41,263, according to Kelley Blue Book data. That’s the third-highest number on record and 5.4% higher than in May of 2020.
The average transaction price for a luxury car in May stood at $56,371, while non-luxury buyers paid an average of $38,459.
Microchip Shortage Meets Cash Surplus
Several factors have pushed prices higher. Manufacturers are running short of many popular models. A worldwide shortage of microchips has forced automakers to slow or pause production of some models. Dealers had less than two weeks’ supply of some popular SUVs last month – well below industry norms.
Buyers, meanwhile, are in abundant supply. Government programs designed to stimulate the economy left many with additional money to spend, and consumer confidence has rebounded sharply from the lows of last year’s COVID-19-related lockdowns. The COVID-19 crisis also drove some Americans toward car lots, as they are nervous about taking public transportation during an ongoing pandemic.
Consumers Buying Sedans Again … Maybe
May transaction data show a dent in a long-term trend: Shoppers bought more sedans than expected. Americans still bought more SUVs than any other type of vehicle, but passenger cars made up 26% of sales (3% higher than one year before). Pickup truck purchases declined slightly, making up 17% of purchases in May (compared to 22% one year before).
It’s not yet clear whether the decline in truck sales is a decline in demand. The microchip shortage has heavily impacted trucks, and dealers can’t sell what they don’t have.
Don’t Expect a Discount
With demand high and supplies low, dealers are finding little reason to discount vehicles. Incentives represented just 7.4% of the average transaction in May – a 10-year low.
See the Best Car Deals this month.
Electric Car Prices Declined
“Many manufacturers reported year-over-year gains in average transaction prices. The largest increase came from Mitsubishi, up 12% from this time last year,” said Kayla Reynolds, industry intelligence analyst at Cox Automotive, parent of Kelley Blue Book. Tesla saw the largest drop in sales, with its cars selling for 8.8% lower than one year before.
Electric car buyers paid an average of 11% less this May than in May of 2020.
