Competitive pressures in the US new vehicle market are nearly eliminating price increases during a model year, according to retail transaction data compiled by JD Power and Associates’ Power Information Network division (PIN). The data excludes fleet sales.
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During the 2006 model year, actual new vhicle retail transaction prices for 44 of 50 high-volume models have declined, PIN said. This pricing includes powertrain and body type, normalised for all months. The prices for the remaining six models have increased slightly since the beginning of the year. Four of the six models with posted price increases had an actual retail transaction price increase of less than 2%.
“The mid-year price increases to cover increased costs, once common in the industry, have disappeared,” said PIN’s senior director of industry analysis Tom Libby. “Intense competition, fuelled in part by the continued expansion of Asian and European manufacturers into new segments, as well as shortened product life cycles that are bringing new models to market faster than ever, has kept downward pressure on new-vehicle prices.”
There are more than 286 new-vehicle models available in the US market today, compared to 257 five years ago.
The 50 models used in the analysis represent 48% of total US new vehicle sales volume and are many of the most popular models in the industry, covering a wide array of body types, manufacturers and brands.
PIN found that the only instances in which new-vehicle retail transaction prices now generally rise are when a model is replaced with an all-new design or when a new model year begins.
“Along with the dampening of price changes is the growing realisation that the volatility of rebates and other incentive programmes is being greatly reduced from past years,” said JD Power chief economist Bob Schnorbus.
“Consumers have not yet adjusted to the fact that they no longer have to wait for a blow-out incentive programme to get a great deal on a new vehicle.”
