Sticker Shock: New Vehicle Prices Up 4.3% From Year Earlier
Prices for new vehicles edged up 4.3 percent last month from the same period a year ago, even as they dipped 0.3 percent from April, according to market research released Tuesday.
Cheaper gasoline drove demand for trucks and sport-utility vehicles, resulting in an elevated average transaction price, according to Karl Brauer of Kelley Blue Book, which compiled the data.
Auto makers on Tuesday were expected to post total sales in May of about 4.59 million new cars and trucks, down 0.9 percent from a year ago, but putting the industry on track for 2015 sales of 17.4 million, according to Edmunds.com.
Spending by automakers on sales incentives during May was nearly flat, according to Kelley, a unit of the private media conglomerate Cox Enterprises Inc.
See Also: Automotive Giants Report Record May Sales
Consumers are financing those higher sticker prices with increasingly longer-term loans, according to Experian Automotive.
Experian said Monday that terms lasting 73 to 84 months, accounted for nearly 30 percent of all new vehicles financed during the first quarter, up 18.6 percent from a year ago and the highest since Experian began tracking the data in 2006.
The trend "doesn't necessarily represent an ominous sign for the market," Experian's Melinda Zabritski said.
But consumers "need to keep the car longer or could face negative equity should they choose to trade it in after only a few years," according to Zabritski.
The average monthly payment for new vehicles rose by nearly 3 percent to $488 in the recent first quarter, according to Experian, a unit of Experian plc (OTC: EXPGY).
The average new vehicle loan rose to $28,711 in first quarter, from $27,612 last year.
During May, General Motors Company (NYSE: GM) and Ford Motor Company (NYSE: F) registered gains in average transaction prices of 4.2 and 4.3 percent, respectively.
Honda Motor Co Ltd. (NYSE: HMC) and Toyota Motor Corp (NYSE: TM) prices rose by 2.9 percent and 2.3 percent.
Fiat Chrysler Automobiles NV (NYSE: FCAU) stickers gained 3.8 percent.
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Posted-In: Experien Karl Brauer Kelly Blue Book Melinda ZabritskiNews