The Average Price for a New Vehicle Grows as More Customers Choose Trucks and SUVs
General Motors’ recent decision to shed six sedans from its vehicle lineup carries with it some serious implications for the sedan segment. This decision will also impact how affordable vehicles are for the average buyer. As more and more automakers abandon passenger cars in favor of SUVs and trucks, the average transaction price for a vehicle will rise in turn.
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Five years ago, 60 percent of vehicles sold in the U.S. were priced below $30,000. Now, the share of vehicles sold below that starting price hovers right around 40 percent.
The increasing popularity for the SUV and crossover segments is partly to blame for the rising average vehicle asking price. While a compact car currently costs right around $20,623, a compact crossover costs $28,448 on average. Even subcompact crossovers cost an average of $24,559.
Automakers like GM hope that their compact car customers will turn to their subcompact crossover lineup as an alternative. However, many industry analysts expect that those customers will simply purchase a compact crossover from a competing brand instead.
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Then again, the rapid loss of sales for the passenger car segment suggests that customers may be more than willing to make the switch. In 2017, passenger cars made up 36.2 percent of the automotive market. So far in 2018, that share has shrunk to 31.4 percent.
That’s still 1.46 million compact cars sold so far this year. So while the segment is rapidly shrinking, it is not yet nonexistent.
Regardless of whether customers choose to stick with sedans, switch brands, or convert to crossovers, they will likely see larger price tags the next time they shop for a new vehicle.
News Source: Automotive News (subscription required)