Incentive spending, transaction prices to hit record in December

Average vehicle transaction prices and OEM incentive spending are set to hit record highs in December, leapfrogging highs set last month, according to a joint forecast by J.D. Power and LMC Automotive.

December’s average transaction price for new vehicles is on a pace to hit $34,602, a 1.9% increase from the same prior-year period. The report attributes the growth to increasing prices of vehicles in the truck and SUV segment. Combined with record prices and overall sales, consumers should spend $462 billion on new vehicles in 2019, the report said. By comparison, consumers spent $453 billion on new vehicles last year.

OEM incentive spending per unit is also set to hit a record this month at $4,600, a year-over-year increase of 2.9%. The previous high was $4,520, also set in November. Additionally, incentive spending as a percentage of MSRP is expected to remain at 11%, the highest level since 2008. “Among the 25 top-selling brands in the industry, all but four are expected to show an increase in overall [incentive] spending,” the forecast noted, although did not specify which brands.

Looking forward, “manufacturers will face a lot of pressure to stand out in a crowded market with nearly 60% more redesigned or new entries in 2020 than there were in 2019,” said LMC Automotive’s President of Americas Operations and Global Vehicle Forecasts Jeff Schuster in a statement.

Neither company was available for comment at press time.

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