ALG, Inc., a subsidiary of TrueCar, Inc. and the industry benchmark for determining the future resale value of a vehicle, projects average transaction prices (ATP) to be up 4.6% or $1,607 from a year ago but down -1.7% or $639 from April 2020.
“Every brand, with the exception of Kia, has increased their average transaction price year-over-year in May mainly attributed to ongoing 0% interest rates. Kia is down likely due to lower inventory levels on their popular Telluride model, which carries one of the highest MSRPs in their lineup,” said Eric Lyman, Chief Industry Analyst at ALG, a subsidiary of TrueCar.
“It’s important to note that while average transaction prices have increased year-over-year, they are down month-over-month,” added Lyman. “We can expect a trend of lower inventory on popular models across automakers as production stoppages and higher than expected demand are taking shape based on geography. As a result, we expect automakers to continue to not only pull back, but also shift their incentive strategies from nationally based to regionally and locally based in order to offset those supply shortages. We expect the highly incentivized and in-demand SUVs and trucks to be affected more than other segments.”
ALG projects that U.S. revenue from new vehicle sales will reach more than $39.4 billion for May 2020, down 29% (based on a non-adjusted daily selling rate) from a year ago and up 49% from last month.
“Ford and Hyundai have seen the biggest gains in average transaction price year-over-year with their aggressive and ongoing incentives,” said Nick Woolard, Director of OEM and Affinity Partner Analytics for TrueCar.
“For Ford, the combination of discontinuation of sedans as well as strong performance by the new Explorer are leading to higher transaction prices year-over-year for the brand overall,” said Woolard. “Meanwhile, Hyundai has shown both strength in sedans, especially with the all-new Sonata, as well as growth at the top of their product line with the Palisade. These new products as well as strong performance with financing offers that are resonating with today’s shoppers have resulted in strong performance year-over-year in average transaction prices.”
“On the Retail Health Index, which measures automaker brand health on a month-to-month basis, the brands that had the biggest declines in March and April are springing back this month. Luxury automakers such as Audi and BMW are making a comeback month over month as high-lease volume parts of the country are easing stay at home restrictions,” added Woolard.
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