Yahoo Finance Average new car price hits record $41,000
Supply constraints and increased demand drove the average price of a new car to $41,044 in July, an all-time high, according to J.D. Power's latest U.S. Automotive Forecast.
"We can't get to $41,000 without both a supply chain issue that we're seeing from microchips, as well as increased consumer demand that is not being met with the supply available," J.D. Power Vice President of Data & Analytics Tyson Jominy told Yahoo Finance.
The previous high, set in June, was $39,942.
"Too few vehicles in inventory mean the sales pace in July is well below the levels seen earlier this year," J.D. Power President of Data Analytics Thomas King told Yahoo Finance. "Conversely, the lack of inventory is driving the price of the vehicles to records highs as manufacturers and retailers continue to dial back discounts."
Dealers will have roughly 932,000 new vehicles for sale on lots nationwide at the end of July, according to the forecast, compared with 3.1 million two years ago.
Goldman Sachs analysts, in a new note, also highlighted that "a stimulus-driven surge in demand and semiconductor shortages that severely limited production have led to a drawdown in inventories and a spike in prices for new and used cars."
'We were flying with demand'
J.D. Power predicts new vehicles sold in July will be about 1,187,300 units. That would be a 3.7% increase compared with July 2020 and an 8.7% decrease compared with July 2019.
"I mean, prior to this month, retail sales have been running far in excess of 2019," Jominy said. "In fact, the first half of the year sales were up about 12% from 2019 levels. So until the inventory situation caught up, we were flying with demand in the auto industry."
More than 45% of new vehicles sell within 10 days after arriving at a dealership, with the average number of days a new car sits on the lot falling to a record low of 31 days. (Six months ago, that number was 75 days.)
J.D. Power predicts total new vehicle sales in 2021 will reach 15 million units, down from the 16.9 million sold in 2019.
An increase in microchips and easing of supply chain constraints will help car manufacturers increase supply, relieve pricing pressure, and sell more cars — but that may take a while.
"As far as we can see, our forecast calls for very similar conditions to persist throughout all '21 In fact, well into 2022," Jominy said.
In terms of consumers, Jominy noted that low inventory and high prices "is certainly cutting off a large part of the population from participating in the new car market, which could have ramifications for many years to come."
Adam Shapiro is co-anchor of Yahoo Finance Live 3pm to 5pm. Follow him on Twitter @Ajshaps
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