Consumers who have put off buying a vehicle for well over a year because of low supply and high prices still aren’t getting much relief. While used car inventories are growing again and prices have softened, new cars and trucks still carry a high price tag.
Data compiled by iSeeCars.com shows dealers continue to mark up new cars over the manufacturer’s suggested retail price (MSRP), with the average transaction price (ATP) now 10% above the sticker price.
And that’s just the average. Karl Brauer, executive analyst at iSeeCars, says the average Jeep Wranger ATP is now 24.4% above the MSRP. The Porsche Macan is being marked up by 23.1% and the Genesis GV70 by 22.4%.
Brauer notes the average new car price in the February to March period was $41,722. In the July to August period, the average new car price had risen to $43,528.
“Both prices are about 10% above MSRP, so that percentage isn’t changing, but MSRPs have gone up and so have transaction prices,” Brauer told ConsumerAffairs. “The only new car selling below MSRP is the Chevrolet Bolt – just barely below MSRP.”
Lower used car prices
There was some relief on the used car lot last month. Wholesale used-vehicle prices on a mix, mileage, and seasonally adjusted basis fell 4.0% in August from July, according to the Manheim Used Vehicle Value Index. The index declined to 210.8 in August but is up 8.4% from a year ago.
In August, the Manheim Market Report (MMR) values saw larger-than-normal declines that were consistent over the month. In August, the index for three-year-old vehicles – the hottest segment among used vehicles – dropped a net 2.5%.
Over the month of August, daily MMR Retention, which is the average difference in price relative to current MMR, averaged 98.3%, meaning market prices were below MMR values. The average daily sales conversion rate increased to 50.5%, but that is still below normal for the time of year.
The data shows that both the new and used vehicle markets have yet to recover from the effects of the COVID-19 pandemic. Pandemic-induced supply chain interruptions reduced the number of available new cars and trucks.
Not only did the shortage of new cars raise prices, it sent more consumers to the used car lot, driving prices of used cars and trucks to record highs.