In spite of the pandemic, average new car prices hit an all-time high at the end of 2020.
The average new car cost more than $40,000 for the first time in history at the end of 2020, a shocking increase from the $34,000 record we saw in 2019. According to USA Today, those rising transaction prices were accompanied by bigger down payments and more borrowing, with the average new car costing $40,170 in the fourth quarter of the year.
In Q4 2020, the average buyer put down $4,734 – almost a record – and financed $35,373, numbers that are up significantly over the same time period in 2019. What’s more, auto sales industry-wide were down, with juggernaut Toyota seeing an 11.9-percent sales decrease compared to 2019. So what kinds of cars are driving average prices up?
Gallery: 2021 Bentley Bentayga
Well, given Bentley’s record 2020 sales and Lamborghini’s best-ever six-month period from June to December, it’s likely ultra-luxurious brands are contributing to that higher end-of-year average, even if they’re outliers that cost deep into six figures. And while most luxury cars saw overall sales decline in 2020, utility vehicles yet again represented the largest pie slice – BMW’s X3 was its top seller, while the Mercedes-Benz GLC and Lexus RX took the top spot of their respective brands’ sales podium. Cadillac isn’t even immune; the flagship Escalade was its second-place seller, after the midsize XT5 crossover.
Even among commodity brands, the trend toward more expensive crossovers and SUVs continues. For example, the compact Ford Escape SUV outsold every Blue Oval passenger car all by itself, as did the midsize Explorer. The Buick Encore GX ran away with its family’s sales crown, and the Rogue did the same for Nissan. So who’s out there driving prices up, even amid the coronavirus pandemic?
By and large, it looks as though it’s wealthier folks. Jessica Caldwell, executive director of insights at Edmunds, told USA Today that people buying new cars are financially insulated from the pandemic. “It’s almost like we have two different countries within this country of people who are buying new houses, buying new cars, versus other folks who are perhaps in the service industry and are struggling,” Caldwell said.