At Close To $4,000 Off Sticker Price, Automakers Still Come Out Ahead...

At Close To $4,000 Off Sticker Price, Automakers Still Come Out Ahead Percentage-Wise


Despite widely promoted Black Friday discounts, the average transaction price for cars and trucks in November — the price retail customers actually pay, taking incentives into account — is expected to reach a monthly record at $37,099, up 8.3% from a year ago, according to a joint forecast from J.D. Power and LMC Automotive.

That corresponds to an average monthly payment of $602, up $19 from a year ago, the forecast said.

There are a couple of pieces offsetting good news for consumers, especially consumers with a trade-in:

One, the estimated average trade-in for November is worth $5,175, up $772, or 17.5%, vs. a year ago, thanks to high demand for used vehicles. Two, with some help from incentives, the average interest rate on auto loans is an estimated 4.4% in November, down 0.91 percentage points from a year ago.

The estimated average incentive amount for the month is $3,866 per vehicle, the forecasting and consulting firms said. That sounds like a lot, but it’s down $657, or 14.5% from a year ago. November would also be the third month in a row the average incentive was less than $4,000, the forecast said.

To put it another way, the average incentive for the month of November is expected to be worth about 9% of Manufacturer’s Suggested Retail Price, down from 11% a year ago.

Automakers are being more “disciplined” about offering incentives this year, said Thomas King, president of the data and analytics division at J.D. Power.

The decrease in the average incentive amount is partly because the supply of new vehicles is still thinner than usual for this time of year, due to plant closings earlier in 2020 because of the coronavirus, analysts said.

In addition, the widespread shift to larger trucks and away from smaller passenger cars has also served to increase the average transaction price, since the average truck costs more than the average car.

Pickup trucks, SUVs, minivans and crossovers are expected to account for 78% of U.S. retail auto sales this year, up from 74% a year ago, according to J.D. Power and LMC.

Source link