Among today’s new vehicles, the average manufacturer retail price has soared to nearly $50,000, with some vehicles exceeding six figures and $75,000 pickup trucks being the norm.
It’s giving many consumers sticker shock, with affordability becoming one of the greatest challenges facing vehicle buyers.
The Cox Automotive Industry Insights team examined market shift in pricing over the past five years. The analysis focused on vehicles priced at less than $25,000, which consumers generally regard as affordable, and vehicles priced over $60,000, exceeding the annual income of the average American.
The analysis team took a snapshot of total new-vehicle sales in December 2017 (1.6 million vehicles sold) and five years later on December 2022 (1.3 million sold). They considered three key measures of the two groups (under $25,000 and over $60,000): number of models available at each price point, volume sold, and share of total sales.
They found that in December 2022, 25% of total new-vehicle sales were vehicles with MSRPs over $60,000, compared to December 2017, when that share was 7.8%.
Escalating prices and high interest rates are shutting out shoppers with low credit scores. Now it seems that a new vehicle is a luxury item that only the wealthiest buyers can afford.
Cox reported there were 36 models with MSRPs below $25,000 in December 2017, and that share represented nearly 13% of total new-vehicle sales. In contrast, in December 2022, there were only 10 models with MSRPs under $25,000, and the share of sales plunged to under 4%. In December 2022, buyers with subprime credit scores accounted for just 5% of the market, compared to 13.9% in 2017.
However, the bigger move was on the more expensive vehicle side. Luxury brands took a greater share of the market, and nonluxury brands made and sold more luxury-priced vehicles. In December 2022, over 25% of new vehicles sold had MSRPs higher than $60,000. Automakers had 90 unique models in that category, with total sales of 323,368. In December 2017, the share of vehicles priced over $60,000 was less than 8%. There were 61 models, with sales of 122,864.
The Cox Automotive/Moody’s Analytics Vehicle Affordability Index found new-vehicle affordability improved slightly in January, as new-vehicle prices stabilized and household incomes improved. But with more interest rate increases on the horizon and a continued focus on high-end buyers, Cox analysts expect vehicle affordability to remain a top concern among vehicle buyers.