From June 2009 until September 2010, the average price paid per vehicle rose from $23,500 to $27,229. This rise in average transition price can be attributed to higher sales of luxury, larger, and fully loaded vehicles in the past year. In October alone, the percentages of year-over-year growth of higher-end vehicles overwhelmed those of their more economical competitors. Pickup truck sales were also up in October, which is an indication that businesses are heading back into the market for work trucks.
Over the past year, the average transition price has been steadily increasing, and by September it had risen $1,400 from the beginning of the year. Auto manufacturers that are doing significantly better in 2010 than they have been in previous years include Cadillac, Acura, Porsche, Audi, and Lexus, whose sales figures were up 46% this year.
Affluent customers can be thanked for the increase in average price paid per vehicle. They are leading the way back into the new car market, which is a positive sign for the economy and, more specifically, the auto industry. This dive back into the luxury market is likely due to a new attitude among wealthy consumers. Their financial situations have improved from where they were a year ago, and as a result, these customers have more of a disposable income to spend, and feel less guilty about doing so. Affluent car buyers now feel free to go all out and buy that car they have been wanting for a while.
Another factor influencing the increased transition price is new car technology. Buyers today are showing more interest in the expensive extra technology they can add to their new vehicle, including navigation systems, parking aids, and high-end audio. These additions alone can increase the price of the car by a couple thousands of dollars, and they are not only being added to higher-end vehicles. Even consumers who are opting for less expensive, more practical cars still want their new vehicle to be fully-loaded.
Trucks and SUVs have also been making a comeback this year, and accounted for 54% of the market in October. Luxury SUVs and crossovers have both experienced a considerable increase in sales in 2010. Lower gas prices and increased fuel economy on larger vehicles can be attributed to this boost in sales.
Although the auto industry has seen significant improvements in the past year, they know they are not out of the woods yet. While these numbers are certainly promising, they do not conclude that Americans are necessarily heading back in the direction of larger and luxury vehicles due to one major factor: the middle class. Middle-class consumers have not headed back to car lots just yet, as they still have most of their money tied up in other expenses and their disposable income has not increased by nearly as much. It remains to be seen exactly where the U.S. auto market is heading, but this is certainly a step in the right direction.