Sticker Shock: New Vehicle Prices Up 4.3% From Year Earlier

Prices for new vehicles edged up 4.3 percent last month from the same period a year ago, even as they dipped 0.3 percent from April, according to market research released Tuesday. http://mediaroom.kbb.com/2015-06-02-New-Car-Transaction-Prices-Up-More-Than-4-Percent-On-Truck-SUV-Demand-According-To-Kelley-Blue-Book Cheaper gasoline drove demand for trucks and sport-utility vehicles, resulting in an elevated average transaction price, according to Karl Brauer of Kelly Blue Book, which compiled the data. Auto makers on Tuesday were expected to post total sales in May of about 4.59 million new cars and trucks, down 0.9 percent from a year ago, but putting the industry on track for 2015 sales of 17.4 million, according to privately held Edmunds.com. http://www.edmunds.com/about/press/nearly-1-6-million-new-cars-sold-in-may-push-seasonally-adjusted-annual-rate-saar-to-impressive-17-4-million-says-edmundscom.html Spending by automakers on sales incentives during May was nearly flat, according to Kelly, a unit of the private media conglomerate Cox Enterprises Inc. Consumers are financing those higher sticker prices with increasingly longer-term loans, according to Experian Automotive. https://www.experianplc.com/media/news/2015/q1-2015-safm-part-2/ Experien said Monday that terms lasting 73 to 84 months, accounted for nearly 30 percent of all new vehicles financed during the first quarter, up 18.6 percent from a year ago and the highest since Experian began tracking the data in 2006. The trend "doesn't necessarily represent an ominous sign for the market," Experien's Melinda Zabritski said. But consumers "need to keep the car longer or could face negative equity should they choose to trade it in after only a few years," according to Zabritski. The average monthly payment for new vehicles rose by nearly 3 percent to $488 in the recent first quarter, according to Experien, a unit of Experian plc EXPGY. The average new vehicle loan rose to $28,711 in first quarter, from $27,612 last year. During May, General Motors Co. GM and Ford Motor Co. F registered gains in average transaction prices of 4.2 and 4.3 percent respectively. Honda Motor Co Ltd. HMC and Toyota Motor Corp TM prices rose by 2.9 percent and 2.3 percent. Fiat Chrysler Automobiles NV FCAU stickers gained 3.8 percent.