Overpriced: Paying Sticker Price, Or More, For New Cars Is Still A Thing

Forbes Lifestyle Cars & Bikes Overpriced: Paying Sticker Price, Or More, For New Cars Is Still A Thing Jim Henry Contributor Opinions expressed by Forbes Contributors are their own. I cover the pervasive, yet little-understood auto industry. Following Jul 31, 2023, 03:28pm EDT | Press play to listen to this article! Got it! Share to Facebook Share to Twitter Share to Linkedin Pre-pandemic, it was unheard-of to pay full sticker price — or more — for new cars and trucks.

Until . . .

[+] this spring, it was commonplace for almost two years, and it’s still pretty common. Getty Images By one rough measure — whether customers pay more than Manufacturers Suggested Retail Price, commonly called sticker price —cars and trucks are getting a little more affordable , as of the second quarter, and prices are likely to moderate further, through the rest of 2023, as supplies increase. Thomas King, president of the data and analytics division at J.

D. Power, said in a forecast for July U. S.

auto sales that 28. 7% of new vehicles were projected to be sold above MSRP. That’s still pretty shocking, but it’s down from 49.

3% in July 2022. It’s highly unusual in historical terms for practically anyone to pay full sticker price, let alone more than sticker price, let alone almost 30% of the market. Low inventory is to blame, stemming in part from a shortage of computer chips, which happened on the heels of COVID-19 related shutdowns early in the pandemic.

The chip shortage is gradually improving, but now some auto manufacturers are purposely slow-walking production increases, to maintain high prices. Retail inventory in July is an estimated 1. 3 million cars and trucks in July, according to the monthly forecast issued jointly by J.

D. Power and GlobalData . That’s about the same as June 2023, but it’s up 63.

7% vs. 2022, the forecast said. It’s also less than half pre-pandemic levels.

MORE FOR YOU Apple Leaks Detail All-New iPhone 15, iPhone 15 Pro Design Changes Apple iPhone 15 Pro New Leak Reveals Awesome Updates In Definitive Report WWE NXT Great American Bash Results: Winners And Grades On July 30, 2023 However, analysts said customers may still have to pay sticker price or above, for some luxury brands, and some sought-after new models. Joe Lower, CFO for AutoNation , a big dealership chain based in Fort Lauderdale, Fla. , said “almost 40%” his company’s second-quarter, new-vehicle sales were at MSRP, down from about 45% in the first quarter.

“The overall new-vehicle market remained healthy during the quarter, as almost 40% of our vehicles were sold at MSRP, which continues to be far higher than pre-pandemic levels,” he said in an earnings conference call. Those high prices are largely driven by how much inventory is available, and that varies a lot, from manufacturer to manufacturer, and even brand to brand within the same manufacturer. Generally speaking, Lower said premium-luxury brands were about average in terms of inventory, volume-import brands like Honda and Toyota were below average, and domestic brands were above average.

That implies low incentives for the brands with the shortest inventory, and higher incentives for the brands with higher inventory. Roger Penske, chair and CEO of dealership chain Penske Automotive Group , Bloomfield Hills, Mich. , said about 54% of its new-vehicle sales in 2023 were at sticker price, through July.

That’s above average vs. the industry, because Penske Automotive has a high luxury-brand mix of dealerships. Jim Henry Editorial Standards Print Reprints & Permissions.