The average price of a new automobile sold in America in June was $48,043, according to Kelly Blue Book, a Cox Automotive company. This is the highest average price ever and the first time it has been above the $48,000 mark. The average for June was 1.8% higher than May's and 12.7% higher than it was a year earlier.
What To Know: Benzinga’s Money Mitch had the opportunity to catch up with Cox Automotive Senior Director of Automotive Relations Michelle Krebs to discuss her thoughts on the inflationary pressures on the new and used vehicle markets.
“What we find is that — with people who are in the market — while it is a smaller group of people, it is a more affluent group,” Krebs said.
Sales of luxury vehicles accounted for 18% of the market in June with Mercedes-Benz transactions typically costing between 6.5% and 8.7% more than MSRP. On the other hand, Buick, Lincoln and Dodge Ram models were selling for almost 1% less than MSRP.
Non-luxury car buyers typically paid $1,017 more than the advertised price. Compared to only $158 over MSRP in June 2021, consumers paid an average of $1,000 more than MSRP in each month of 2022.
Krebs doesn’t believe that vehicle sales will be affected by an official recession.
“We would argue that even if an economic recession hits the U.S., vehicle sales are not going to be affected much — because basically, they’ve been in recession mode for the past three years.”
In a recent report, Cox stated its Industry Insights team continues to feel the demand for new vehicles is generally solid and sales volumes could increase if there is an adequate supply.
At the end of the second quarter, Cox lowered its full-year forecast to 14.4 million new-vehicles sales, down from an end-of-first-quarter forecast of 15.3 million, the company said on its website.
“We started the year at 16 million in 2022, things didn’t happen as we thought in the first quarter, so we lowered it to 15.3 million — it didn’t improve in the second quarter, so we lowered it to 14.4 million. We’re going to have to see some production and inventory increases to even get to that number,” Krebs said.
She also believes mega-EV company, Tesla Inc (NASDAQ:TSLA) has competition coming that will swallow up a significant portion of its current 70% market share.
“They [Tesla] now have over 70% of the market — I’ve seen estimates from Bank of America Corp (NYSE:BAC) in the next five years that has them at 11%,” Krebs noted.
Krebs went on to speak about Tesla’s lack of new products, calling out CEO Elon Musk for promising the new all-electric Cybertruck while Ford Motor Company (NYSE:F) has already released its electric version of the popular F-150 lineup, the Lightning.
Watch the full interview below to get the rest of Kreb’s insights.
