New Vehicle Prices Up for 5th Month, Kelley Blue Book Says

Although there are more vehicles available to shoppers on dealers’ lots, the price of new vehicles is still rising, having set another record in August.

The average price paid for a new vehicle in August was $48,301, breaking July’s previous record of $48,080, according to a Monday (Sept. 12) press release from Kelley Blue Book . This is the fifth straight month that new vehicle prices have increased.

Several factors contributed to the higher prices, including inventory levels that remain below those seen in 2019 and 2020 despite recent improvements, supplies of popular vehicle segments remaining especially low and luxury vehicles accounting for a growing share of the vehicles that are sold, per the release.

“Automakers are focusing on building and selling high-margin vehicles,” Rebecca Rydzewski , research manager of economic and industry insights at Kelley Blue Book parent company Cox Automotive, said in the release. “Essentially, the product mix is the primary factor keeping prices high.”

Kelley Blue Book Executive Editor Brian Moody told PYMNTS that the increase in vehicle price will also increase the cost of a loan because not only is the car more expensive, but the interest will cost more on the higher dollar amount financed.

“In addition, the rising prices of new cars will cause some to extend the finance term, which means more money spent on interest for those extra months,” Moody said. “Finally, access to auto loans has decreased for the fourth straight month in August. This means loans are harder to get, and those who qualify will likely see higher interest rates.”

Globally, the massive shortage of new cars and the significant delays in the delivery of new cars has led to a double-digit surge in the price of used cars, as Tarek Kabrit, co-founder and CEO of Dubai-based online auto marketplace Seez, told PYMNTS in an interview posted in July.

Read more: Automotive Retail Needs to Think More Like Uber and Open Table to Sell Cars Online

With rising interest rates, however, the price inflation for used cars will likely stabilize moving forward — and as global competition heats up in the online auto retail space, it is likely that the next few years will see greater market consolidation, Kabrit said.

“It’s part of the game,” Kabrit explained. “Every once in a while, there’s some survival of the fittest that comes around, and those who make it through usually end up being better and stronger.”