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New vehicle sales hit record high for fifth-straight month

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Kayla Reynolds, an analyst at Cox Automotive, breaks down Kelley Blue Book's latest report on new car sales.

Video Transcript

SEANA SMITH: If you're in the market for a new car, you better get ready to pay even more. Because the prices, they just continue to push higher. There's new data out showing that new car prices hit another record for the fifth month in a row in August, this time coming in just over $43,000. We want to bring in Kayla Reynolds, Cox Automotive analyst. And Kayla, this is something we've been talking about now for quite some time, the trend here in car prices. They continue to push higher, up 10% year over year. Is this going to slow down or stop anytime soon? Or is this going to continue to trend to the upside?

KAYLA REYNOLDS: Thanks for having me today. So like you said, in August, we saw a new vehicle average transaction prices just above $43,000, which was a 2% increase from July, but also our fifth consecutive month of a new historical high number for the data point. August last year also was a historical number for being the last month that we saw the new average transaction price data point below the $40,000 mark. It's continued to increase for these rolling 12 months. And like you did state, it is at a 10% increase year over year.

But to also put that in perspective, the average annual dollar amount increase for a new average transaction price between the years of 2012 and 2019 was around $2,043. But in 2020, the annual dollar amount new average transaction price increase was $25,062. And year to date, we've already seen it through August rise by $2,100.

- Kayla, I want to read some prices to you to see your reaction. A Cadillac for $1,600, a Studebaker for $700. This is from 1920. My grandfather had a used car lot. And I love looking at this, the "Portland Press Herald". The reason I do that is because when we look at car prices, things-- I mean, dependent on the era in which we live. And we know that there's a shortage of chips. But one of the things that the Blue Book data really stuck out for me was that electric vehicle prices, are they actually coming down?

KAYLA REYNOLDS: That is one segment where we have seen large price decreases. But we're not going to specifically say it's due to the fact that manufacturers are having lower priced vehicles. But there's been some new model entrants that have entered into the segment such as the Mustang Mach-E and also the Volkswagen ID 4 that have allowed for the overall segment as a whole to drop around 12% year over year. But that compared to their counterparts, such as the Model S and the Audi e-tron that are priced at the average transaction price above $100,000, that is a little bit comparable.

But that allows for the segment as a whole to be brought down substantially compared to last year.

SEANA SMITH: And Kayla, when we compare some of these numbers, I know you guys also pointed out the all time high prices. It's also a company though with the fourth straight month of a slowdown in sales price. Is this because people simply can't get the hands on the cars that they want? Or are we starting to see some of that frenzy that was sparked a lot by, or triggered, I should say by COVID starting to fade?

KAYLA REYNOLDS: Here at Cox Automotive, our storyline has definitely been that this frenzy that we saw in early spring has definitely been impacted by inventory shortages. When we look at it from a dealer and consumer perspective on the dealers and from a lot of our studies regarding the Cox Automotive dealers sentiment index, a lot of the dealers are indicating that they feel like the market is strong, but in the next three months they do feel as though demand and supply won't be able to keep up with each other, thus in turn impacting their sales.

But also on the consumer end, some of our studies have also shown that some of the consumers are aware of the microchip shortage. And they are planning to hold off or postponing on purchases moving forward.

- Some of us have Porsche taste but we have Fiat wallets. So we have to be cost conscious. I want to put you on the spot, Kayla. And I'm just curious. Would you buy, if you could buy a new car today, would you? Or would you hold off?

KAYLA REYNOLDS: I think looking at the market currently right now, what consumers should definitely expect that there are segments that still are below that average transaction price number. The overall average transaction price number, such as the midsize segment for SUVs, and also the subcompact segments. Those have traditionally and historically fallen below the average transaction price point of that $43,000. So I will say that as a consumer, you can find segments that are falling below that historically high price point.