2021 has been an interesting year for the automotive industry thus far. We’ve seen several announcements of a major shift to hybrid and electric vehicles from companies. Exciting new vehicles have been teased. New and used car prices have been skyrocketing. In fact, Kelly Blue Book reported that new car prices have just hit a record high…again.
The price of a new car today
Things are starting to rebound as Covid-19 cases decrease and folks get back to work. During 2020 millions of people were unemployed, but thanks to science, distance, and Father Time, life is getting as close to normal as it can. New car sales have increased, and new car prices have increased right beside them.
The price of a new car today will cost thousands of dollars more than the price of a new car last year from most automakers. You may be thinking this isn’t out of the ordinary. The reality is some new vehicle prices have increased as high as 12% in the last year.
Some vehicle classes actually became more affordable while the majority of them skyrocketed in comparison. Automakers Honda, Stellantis, and Mitsubishi all saw annual average vehicle price percentage increases in the double digits. Tesla and the average electric vehicle became more affordable this year.
What the 2021 price data tells us
What do these price increases mean to the average consumer? While the changes may not seem impactful at first, this data could save you from losing thousands of dollars after making an ill-informed decision. Yearly price increases may seem routine, but if you consider the lack of changes that some model years undergo, consumers may be overspending without reason.
A few thousand dollars saved could mean being able to afford a higher trim level of another vehicle. So what manufacturers raised their prices the most? Are the new models worth such an increase?
The lows of new car ownership
According to Kelley Blue Book, the average new vehicle price increased by 5.4% or $2,125 this year. Before thinking this number is inconsequential, imagine paying an extra $2000 for a vehicle that is essentially the same as the older model depending on the manufacturer. No redesign, no new powertrain, no new features that particularly interest you, just a new, more expensive price. This is exactly the case with many manufacturers.
Some manufacturers land either far above or far below the average increase. The highest average transaction price increase goes to Mitsubishi at 12%. In the second quarter of 2020, the average transaction price for Mitsubishi was $22,525. This year the average transaction price has increased to $25,221. If you’re in the market for a brand new Mitsubishi, make sure the new model year offers new value to go with that price increase.
The highs of new car ownership
While most automakers did increase their prices in 2021, some actually offered discounted prices from last year. For example, automakers Tesla Motors and Nissan North America (Nissan, INFINITI) dropped their average transaction prices. The new car market isn’t all inflated prices.
Nissan’s average transaction price decreased by 0.40%, or a mere $126. This isn’t a huge difference, but it’s much better than an increase for consumers looking to buy new Nissan and Infiniti models. This slight decrease in average price from last year actually makes Nissan’s current lineup one of the most affordable new lineups currently on the market.
Tesla is the unicorn of the report. Tesla is on the opposite side of the spectrum as automakers like Mistubishi, General Motors, Stellantis, and American Honda. Average Tesla transaction prices have dropped as much as 8.80% in the last year or $5,057. Tesla Motors is far from the most affordable automaker, but it is taking the lead in 2021 price reductions. If you’re in the market for a brand new car, you should definitely be aware of how much the manufacturer has increased their prices by this year.