Industry News: Average Transaction Price of A New Car Goes Up

[William Maley]

William Maley

Editor/Reporter - CheersandGears.com

April 18, 2012

New analysis from TrueCar, an online research firm, shows the average transaction price of new cars are on the rise.

TrueCar looked at sales data from last month and found that the average price was 30,748, a rise 6.9% over the previous year.

So why the increase in average price? The answer lies in the options list. Consumers are ticking more boxes on the list like never before, with the average new car being very close to “fully loaded.”

For example, Ford’s president of the Americas, Mark Fields recently told investors that the Focus is selling for an average of $3,100 more per car than the previous model year.

Aside from the option list, the other factor is automakers cutting back on the incentives. This is due to automakers, especially the big three changing their business model to focus more on forecasting and producing vehicles at a proper volume than flooding dealers with too many vehicles.

TrueCar predicts that the average price will begin to level out, sometime when the average price hits $31,000.

Source: USA Today

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[balthazar]

>>"Focus is selling for an average of $;3,100 more per car"<<

Say what?

[Robert Hall]

>>"Focus is selling for an average of $;3,100 more per car"<<

Say what?

$ = $ So $3,100 more than previous Focuses. The html editor Mudmonster uses is broken, it looks like.

[G. David Felt]

WOW, I like the little focus, but would not pay 3100 more for it. I do think the younger generation is expecting far more toys on an auto compared to what we had growing up in the 70's and 80's.

[Robert Hall]

WOW, I like the little focus, but would not pay 3100 more for it. I do think the younger generation is expecting far more toys on an auto compared to what we had growing up in the 70's and 80's.

Yes, manual windows, manual vinyl seats and a cassette deck don't cut it anymore (what my first car had). Small cars don't have to be depressing gray and stripped inside anymore...can get them quite loaded and civilized today.

Edited April 18, 2012 by Cubical-aka-Moltar

[balthazar]

For the burdensome hardships of cranking down windows ( and the like).... perhaps a lot more younger folk could get into a new car, rather than having to wait until they are 50 yrs old.

AFA power seats go- who ever re-adjusts their seat after setting it once? Waste of money & excess weight. At least you use power windows regularly...

Edited April 18, 2012 by balthazar

[Robert Hall]

For the burdensome hardships of cranking down windows ( and the like).... perhaps a lot more younger folk could get into a new car, rather than having to wait until they are 50 yrs old.

The youfs can always ride a bike, the bus, or buy used cars..

AFA power seats go- who ever re-adjusts their seat after setting it once? Waste of money & excess weight. At least you use power windows regularly...

Seats get adjusted if you have two people using the car.. though memory seat settings make that chore easier.

[G. David Felt]

Yea, but I had a rental car a few years back that had manual levers for raising and lowering the seat, twist knob for lumbar support, all worked very well. Cheaper to produce, let chance of failure. We need to stop producing a disposable society and have people understand what it means to work hard to pay for something nice and learn to take care of things.

Maintenance is NOT a dirty word.

My first vehicle was a 1976 Series 5 Luv truck with the Isuzu 4 banger and 5 speed manual. Manual windows, Manual door locks, Manual bench seat. AM/FM radio. This my dad bought new from LeeJohnson Cheverolet in Summer of 75 for $1575 out the door. I loved that truck and when I turned 16, my dad gave me the option of $2k towards a vehicle of my choice and needing to get a job for car payments or I could have his truck.

I took his truck, got a job and restored it to factory stock spec. and sold it when I went to Japan for College in 1989 for $3500 to a lady in Kirkland who still has it and drives it. She loves it and babies it. I do wish some time I could have that truck back. It had real style.

We need to roll back some of the stupid laws that have bloated entry level cars and this would open up a ton of folks to driving.

[William Maley]

balthazar, on , said:

>>"Focus is selling for an average of $;3,100 more per car"<<

Say what?

$ = $ So $3,100 more than previous Focuses. The html editor Mudmonster uses is broken, it looks like.

Yeah, its a bug with IPBoard software.. We know about it and we're waiting on a fix..

[SAmadei]

The youfs can always ride a bike, the bus, or buy used cars..

If they have no bread, let them eat cake.

The "youfs" are currently 50... and every year that cars get more expensive compared to average income, the higher that number will go up. Soon all cars will be designed for 90 year olds... the numbers on the dashboard will be 6 inches tall, the controls will be like a Fisher Price activity center... good for arthritic hands will lousy motor control... and they will largely drive themselves... at 35 mph with the left turn signal on for miles... without the ability to turn off the self-drive feature. Have fun.

[Robert Hall]

The youfs can always ride a bike, the bus, or buy used cars..

If they have no bread, let them eat cake.

The "youfs" are currently 50... and every year that cars get more expensive compared to average income, the higher that number will go up. Soon all cars will be designed for 90 year olds... the numbers on the dashboard will be 6 inches tall, the controls will be like a Fisher Price activity center... good for arthritic hands will lousy motor control... and they will largely drive themselves... at 35 mph with the left turn signal on for miles... without the ability to turn off the self-drive feature. Have fun.

I don't where this 50 number comes in, but I know plenty of people my age (early 40s) and younger that are buying new cars...

[SAmadei]

I don't where this 50 number comes in, but I know plenty of people my age (early 40s) and younger that are buying new cars...

It is the current average age of a new car buyer. So for the plenty of people you know buying cars, there are plenty of 60 year olds offsetting them. To negate BK's buying of the Challenger at 20 something, there is a 80 year old buyer... or two 65 year olds.

[riviera74]

The fact that the average selling price of a new car is up 7% from last year is rather depressing. The reason behind it is not so bad: more features do lead to a higher MSRP. Ditching power everything for manual everything sounds nice until you cannot sell those cars unless there is a large discount attached to that "stripper car". I remember when small cars were essentially penalty boxes. I would never wish anyone a Chevette or an early-80s Escort since they had power nothing and all was manual and cheap. Thirty years ago the Big Three basically hated small cars while the Japanese built decent ones, hence why they are still around. A GOOD small car now can lead to the next purchase to be a more profitable larger car... or crossover for the family. As for the current average age of new car buyers, that is a shame. The only reason that is true is because there are relatively few people under 40 that can afford to BUY a new car. (Leasing is another story.)

[daves87rs]

Yea, but I had a rental car a few years back that had manual levers for raising and lowering the seat, twist knob for lumbar support, all worked very well. Cheaper to produce, let chance of failure. We need to stop producing a disposable society and have people understand what it means to work hard to pay for something nice and learn to take care of things.

Maintenance is NOT a dirty word.

My first vehicle was a 1976 Series 5 Luv truck with the Isuzu 4 banger and 5 speed manual. Manual windows, Manual door locks, Manual bench seat. AM/FM radio. This my dad bought new from LeeJohnson Cheverolet in Summer of 75 for $1575 out the door. I loved that truck and when I turned 16, my dad gave me the option of $2k towards a vehicle of my choice and needing to get a job for car payments or I could have his truck.

I took his truck, got a job and restored it to factory stock spec. and sold it when I went to Japan for College in 1989 for $3500 to a lady in Kirkland who still has it and drives it. She loves it and babies it. I do wish some time I could have that truck back. It had real style.

We need to roll back some of the stupid laws that have bloated entry level cars and this would open up a ton of folks to driving.

Agreed!

What ever happened to simple cars?

People may laugh at my Cavaliers, but they are stupid easy to fix....

And I like crank widows....Tend to roll them down a bunch....I've have a motor gone in a hurry...

[Blake Noble]

It is the current average age of a new car buyer. So for the plenty of people you know buying cars, there are plenty of 60 year olds offsetting them. To negate BK's buying of the Challenger at 20 something, there is a 80 year old buyer... or two 65 year olds.

I'd say we're going to see the average age of new car buyers continue to rise for the next few years.

Here's your food for thought on the subject. There are 100 million Baby Boomers in the United States of Americaland and Canadaland combined. Starting back in 2006, every year, a group of around 5 million of them turn age 60. That means, somewhere in North America, about 10,000 Baby Boomers hit the big Six-Oh per day, which averages out to about 7 people per minute. This rate of aging won't end until around the end of the decade or very early the next.

That huge group of pre-Senior Citizens are all retiring at about age 60 as well. And what do you do when you retire? You usually buy a new car of some sort.

Edited April 19, 2012 by black-knight

[Robert Hall]

From what I've read, my generation (X) is much smaller than the Baby Boomers or the Millennials/Gen Y.. the Boomers are still going to be a big part of car sales for quite a while (since the youngest ones are under 50).

[ocnblu]

Horrible development, and will only get worse as these criminal CAFE standards slam their way down our throats.

[riviera74]

Horrible development, and will only get worse as these criminal CAFE standards slam their way down our throats.

What do you recommend: repealing CAFE standard entirely? CAFE is not a reason new car prices are higher. A factor that does count is all the safety features and technology that goes into them now. A cheap stripper car that could be bought in 1990 or 1980 can no longer be bought in 2012.

[SAmadei]

That huge group of pre-Senior Citizens are all retiring at about age 60 as well. And what do you do when you retire? You usually buy a new car of some sort.

Most of the well-off retirees I've known have dialed back the bling at retirement, but increase the travel. The not-so-well-off retirees become an oxymoron as they work until they die.

From what I've read, my generation (X) is much smaller than the Baby Boomers or the Millennials/Gen Y.. the Boomers are still going to be a big part of car sales for quite a while (since the youngest ones are under 50).

Wiki used to have some good hard numbers, but no more.

Its actually quite shocking the numbers, which vary somewhat depending on the boundary years used to separate the 'gens'...

1945-1964 9 years Boomers 80 million

1965-1979 14 years Gen X 49 million

1980-1999 19 years Gen Y 78 million

(from http://www.time.com/time/arts/article/0,8599,1731528,00.html)

Its especially crazy to compare the average births per year... 8.88 million births per year for Boomers to 3.2 million births per year for Gen X.

I agree the Boomers will be influencing cars for a while, but I also wonder if more of their money goes towards longevity instead of new cars. The Boomers have a lot of money and WILL increase the average lifespan by dumping a lot of money into medical science concerning aging... which will keep them around even longer, but at what impact, financially?

[balthazar]

^ That is the volume at birth, but the volumes today are quite close in each 5-yr age bracket from 15-59.

Obviously a greater percentage of Boomers have died than Gen X or Gen Y.

Not sure that comparing the above volumes, over such a large year span, WRT vehicle purchases today, means anything.

[ocnblu]

riv, what I'm saying about CAFE is... the studies say the new standards will add $2k-$3k to the price of a vehicle, in addition to any other forms of price creep.

[riviera74]

riv, what I'm saying about CAFE is... the studies say the new standards will add $2k-$3k to the price of a vehicle, in addition to any other forms of price creep.

Oh really. I did not know that.

As for Baby Boomers and cars, health care will be extremely high and stay high for a long time because it seems to me that they would like to avoid death. What impact financially: more catering to elderly needs at the expense of almost everyone else. If you don't believe me, drop by SW or South Florida sometime.