More specifically, the microchip shortage in the summer of last year drastically affected the amount of new vehicles that were arriving on the lots. Manufactures often decided to funnel their limited microchips into making higher-end vehicles with higher profit margins to compensate. As a result of focusing on luxury vehicles, fewer affordable options have been available at dealerships, and sales prices are ballooning.
In December 2021, the average buyer paid nearly $65,000 for a new luxury vehicle, whereas the average non-luxury vehicle cost about $43,000, per KBB. Average prices have soared particularly high for certain manufactures. For example, the average new vehicle transaction price across all makes from Tesla Motors and General Motors were 20% higher in December 2021 than a year prior.
Despite limited supply and fewer cars being sold, auto industry revenue is way up.
“The rise in vehicle prices is offsetting the loss in sales volume,” Chesbrough said.
In 2021, industry revenue reached $649 billion, which is nearly $100 billion higher than 2020 and more than 2019 revenue by nearly $2 billion.
And that’s with nearly 2 million fewer vehicles sold in 2021 versus 2019, according to Cox Automotive data.