Car shoppers in the United States eager to get their hands on a new vehicle for a bargain price this coming Memorial Day weekend will instead discover record high prices and low vehicle inventory, according to Kelley Blue Book.
However, KBB notes that consumers remain undeterred as they continue to buy vehicles at a record pace, perhaps because they fear even fewer choices and higher prices in the months ahead. Whatever the case, KBB’s data reveals that consumers clearly are in “buy-now” mode.
“Shoppers are expecting high prices and limited choices, and that’s exactly what they’re finding,” said Vanessa Ton, Senior Industry Intelligence Manager for Kelley Blue Book. “But even with the tough buying conditions, Kelley Blue Book’s data shows most consumers expect to push ahead with a purchase, even in a difficult and competitive marketplace.”
KBB’s research indicates that Americans are aware of the rising demand for vehicles as supply continues to fall; 73% of in-market car shoppers said they expect to find higher prices than in a normal market.
Furthermore, as we approach the Memorial Day sales weekend, more than 60% of consumers said they are not planning to delay their vehicle purchase — and 42% expect to pay more than the sticker price on a new vehicle, whereas nearly 60% expect to find lower incentives.
However, 37% said that high prices and lower incentives would likely delay their purchase, and for those willing to wait, 70% expect to sit the market out for three months or more. Overall, 81% also said they plan to buy within their intended vehicle segment.
“We are in uncharted territory as the auto industry tries to maintain robust sales alongside low inventory levels, and this market really demands patience from shoppers,” said Matt DeLorenzo, Senior Managing Editor for Kelley Blue Book. “Simply put, you can’t buy what’s not there, and dealers’ inventories are extremely tight.”
Strong demand and low supply continue to push prices up. At the end of April 2021, the average vehicle listing price was $39,833 in the United States — which is 7.9% above comparable 2019 numbers. For luxury cars, the figure was $60,691.And while prices are up, incentives are down 25% from a year ago, as OEMs and dealerships remain confident that consumers will soon purchase most of the vehicles on their lot.
“The conditions currently affecting the automotive marketplace — including a global microchip shortage affecting new-car production, pent-up demand from delayed purchases during last year’s pandemic shutdown, supply chain issues and more — also continue to make a mark for used-car shoppers,” said KBB.
U.S. used vehicle prices reached an all-time high at the beginning of May, with the average listing price surpassing the $22,000 mark with a new high of $22,568. The pace of price increases is also speeding up.
Still, KBB said consumers are buying vehicles at a record pace. In April, more than 1.5 million vehicles in the U.S. were sold — up 111% from a year earlier, making it the highest April on record.