Many consumers are on the lookout for good deals when they go to buy a new car, but last month they likely saw higher car prices for the models they wanted.
The average amount consumers paid for new light vehicles rose 0.6 percent on a monthly basis in May, climbing $174 to an average of $30,978, according to the latest data from the price tracking company TrueCar. Meanwhile, that number is also up $618 from May 2012, an increase of 2 percent.
In all, the highest month-over-month jumps were observed by Honda and Ford, for which prices rose 0.9 percent from April, to averages of $27,082 and and $33,089, respectively. Ford’s jump also totaled 4.5 percent on an annual basis.
“Consumer confidence is the highest it’s been since 2007, helping keep demand for new vehicles very stable, and moving transaction prices upward overall,” said Jesse Toprak, senior analyst for TrueCar. “Ford enjoyed a 4.5 percent gain in their average transaction price over last year, with the recovering housing market fueling the resurgence of demand for large trucks like the F-150. This, along with a 40 percent increase in Explorer sales, has moved their average transaction prices above $33,000, an all-time high … for the brand.”
At the same time, it’s likely no surprise that with rising demand, the average value of the incentives offered by major auto manufacturers took a tumble, the report said. In all, the month-over-month drop came to 1.7 percent, as incentives slipped to $2,482 from $2,526. The decline on an annual basis, though, was almost double that at 3 percent. Consequently, the ratio of prices to incentives also dropped, falling to 8 percent from the 8.2 and 8.4 percent observed a month and year prior, respectively.
Consumers may now be feeling much better about their personal finances in general, but should still take the time to carefully consider their credit standings when making major purchases such as these. Lower credit scores can lead to far higher interest rates and potentially more fees on auto loans and other types of credit, which in turn can make them far more difficult to afford in the long run.
Image: Wavebreak Media