What is in this article?:
- Fast-Rising Vehicle Pricing Puts U.S. Industry Comeback at Risk
- Consumers Willing to Pay for Goodies
- Good Time to Buy
- Young Buyers Dwindling
The pricing gains are good news for auto makers, but for many consumers it is leading to downsizing. Loan terms are getting longer and higher prices are putting younger, first-time buyers in jeopardy.
Redesigned pickups, such as Chevy Silverado, to further drive up average transaction prices.
Consumers Willing to Pay for Goodies
But consumers aren’t necessarily getting a raw deal when it comes to their new-car purchases, industry players say. “Some vehicles are getting more expensive,” Chevrolet marketing chief Chris Perry tells WardsAuto, “but there is also more content and value for the customer.”
Other than mechanical options such as a bigger engine or all-wheel drive, navigation systems once ranked among the priciest add-ons a buyer could choose. Today, costly 3-dimensional global positioning systems are just one element of infotainment packages making vehicles as digitally connected as a person’s home.
Many of today’s infotainment systems also employ sophisticated voice-recognition software, making it a snap to switch radio stations or call up a dining destination. The accompanying high-resolution, full-color liquid-crystal-display touchscreens are coveted for their “wow” factor.
None of this technology comes free: The optional MyFord Touch Sony system in a C-segment ’13 Focus SE car costs an additional $1,475, while the optional IntelliLink system in a fullsize ’13 GMC Terrain Denali adds $795 to the base price. Checking the box for second-row entertainment ups the cost another $1,295.
’s UConnect system inside a ’13 Dodge Caravan R/T runs $795 and upgrading to a full entertainment package raises the price another $1,890.
“Prices are creeping up because people want navigation systems, creature comforts, safety systems and high-tech equipment,” says Russ Clark, director-marketing for Chevrolet midsize cars, performance cars and cross/utility vehicles. “Consumers are willing to pay for the goodies they want.”
WardsAuto data shows the penetration rate of multimedia systems in the ’12 model year climbed to 7.6% of vehicles sold, from 1.8% in ’08. Interestingly, that pace of growth matches heated seats, a longer-established industry creature comfort.
“A lot of the content today was previously relegated to luxury vehicles,” says Erich Merkle,’s top sales analyst. “Things such as navigation systems, adaptive cruise control, rearview cameras – they are much more commonplace than five or six years ago.
“Consumers are moving to smaller vehicles but also want more content,” he adds. “They are buying more highly contented and richly appointed vehicles.”
Average used-vehicle prices also are on the rise, up a record 17% to $18,626 year-to-date, from $15,941 in 2008, according to J.D. Power. The price gain comes despite Americans holding on to their vehicles longer. The average used-vehicle odometer carries 53,561 miles (86,196 km), compared with 45,642 miles (73,452 km) in 2008.
A comeback for large pickups, buoyed by the housing rebound, is helping drive up the average light-vehicle transaction price. Large pickup sales so far this year are up 20.8% to 747,577 units, from 619,108 year-ago, according to WardsAuto data.
“Whatever the truck, there’s demand right now,” GM North America President Mark Reuss says.
GM is going against pricing trends with the launch of its redesigned-for-’14 Chevrolet Silverado by keeping the base price of the large pickup unchanged from ’13. But the auto maker plans to add more crew-cab models to its sales mix, which it expects will drive up the average price of the truck overall.
GM also adds to the Silverado line for the first time in ’14 a luxury High Country model targeting the growing $40,000-plus pickup segment that currently comprises 30% of large-pickup sales.
, Toyota and are bringing new pickups to the market in the coming months as well, and launched its new Ram less than a year ago.