Stickers Fall, Prices Don't

New car and truck prices are falling, but the amount people are paying for their vehicles isn't. There's been a major market shift over the last half-dozen years that has seen more buyers opt for higher line, higher content models, says Paul Ballew, General Motors Corp. executive director-market and industry analysis.

Along with the movement toward sales of more expensive vehicles has come a change in buyer demographics, Ballew adds. Today more than 45% of new cars and trucks sold go to customers with incomes of $75,000 or more, up from less than 31% six years ago.

“Pricing remains tough,” says Ballew, noting that retail prices have fallen 2.2% through the first five months of 2002. “And it's highly unlikely we'll be able to reverse that trend.”

Actual transaction prices are on the rise, however, in part because the market has shifted away from economical midsize cars to higher-cost SUVs and cross/utility vehicles. In 2001, consumers paid $25,799 on average for new vehicles, up $1,000 from 1997, GM says.

The biggest bulge has come in sales of $30,000 to $40,000 vehicles, which has gone from 6.3% of the market in 1995 to 18.9% in 2001. Also grrowing is the $25,000 to $30,000 sector, which last year hit 19.3% of sales, up from 13.0% in 1995. The over-$40,000 segment reached 6.3%, from just 1.4% six years earlier.

Vehicles under $20,000 now account for just 29.4% of the market, down from a dominating 52.9% in 1995, Ballew says, citing data from TCE Buyer Behavior.