New car prices to keep rising this year

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There’s no visible end in sight for rising prices of new vehicles, a recent report suggested.

The average transaction price of a new vehicle in the U.S. hit a record high in December at US$49,507, according to data from Kelley Blue Book. That’s an increase of nearly 2 per cent from November and 5 per cent compared to the same time a year before.

This is happening despite inventory levels of new vehicles are inching upwards from historic lows earlier in 2022.

Transactions have also been processing above the manufacturer’s suggested retail price — or sticker price — for more than a year.

In Canada, new vehicle sales failed to cross 1.5 million units last year, the first time that’s happened since 2009.

Kelly Blue Book, a Cox Automotive company, is blaming elevated prices and high loan rates for putting downward pressure on sales in the U.S.

“The transaction data from December clearly indicates overall prices showed no signs of coming down as we headed into year-end,” said Rebecca Rydzewski, research manager of economic and industry insights for Cox Automotive. “Luxury prices fell slightly in December, but non-luxury transaction prices were up. Truck sales were particularly strong last month, and with many trucks selling for more than $60,000, a new record was all but inevitable.”

Electrics vehicles saw a drop in price in December compared to the month before, down 5.5 per cent. The average new EV sold for US$61,448, according to Kelley Blue Book estimates. While that’s still above average, price drops were attributed to significant price cuts at Tesla at the end of the year.