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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