As traumatic as life has been for car makers and dealerships over the past three years, there is a silver lining that is now being revealed: The average price per vehicle has begun to rise… and for the first time in years. That’s according to this story from Forbes/MSNBC. In addition to an uptick in sales, the spike is attributed to the fact that major manufacturers cut their capacity to produce vehicles, which has reduced supply.
To get precisely the vehicle with the options desired, the consumer has had to pay more.
Implications: The price for many models has been stagnant for three years or more, according to the MSNBC story. As frugal as folks are trying to be, it seems that those who are “in the market” for a vehicle can accept the idea that prices are going up.
One challenge to this momentum will be the recent incentive wars that have once again erupted. (Toyota has been using incentive plans to recover from the effects of bad publicity following their recent recalls, and some other makers have followed with similar programs.)
There are a lot of moving parts to this story, but one thing should not go un-noticed: When a need exists, this is evidence that the consumer is willing to spend more to get what they want.
Mike Anderson
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