Luxury Cars Get Pricier, As Mass-Market Affordability Improves

June 27, 2012
2013 Mercedes-Benz G63 AMG

2013 Mercedes-Benz G63 AMG

What price luxury? While there are indications that the cost of some luxury goods are falling somewhat, both new and used luxury cars are costing more this year than they were last year.

That’s an interesting contrast to the mass market, where new cars are costing less than year-ago levels.

The National Automobile Dealers Association (NADA) is predicting that the average price of used luxury vehicles will rise 1.9 percent this year, versus last year; in the general market, prices will rise about 2.9 percent. That’s nothing compared to 2011, when used luxury-brand vehicles went up an average nine percent on a single year.

Brands that are poised for the biggest bump in used prices include Acura (4.8 percent), Audi (3.3), Lincoln (2.6), Lexus (1.6), and Infiniti (1.5). Volvo is the only brand with its average used transaction prices expected to be down significantly (3.1 percent).

Steep rise for used luxury cars

In all, from 2009 to 2011, the NADA Used Car Guide notes that prices across all used luxury vehicles rose 22 percent—ranging from less than 15 percent for Volvo up to about 29 percent for Mercedes-Benz.

While the new luxury market hasn’t quite at nearly the same rate as a whole, the NADA’s projections are based largely on new-car prices by brand—and the idea that supply on the used market is going to be down for a couple more years. For instance, NADA points out, Audi’s strong demand in the new-vehicle market has translated to its strong showing in the used market.

According to Kelley Blue Book, general-market new-car prices are actually down this year, compared to a year ago. That’s mostly because last year at this time supply was still pinched due to the natural disaster in Japan, while production was still ramping up in other markets to meet rising demand.

Mass-market new models selling for less than last year

So it makes sense that some of the models selling at the most significant discount compared to last year are models from Honda ($1,200), and Subaru, Mazda, or Toyota (all between $700 and $800). Year-over-year declines for Ford, GM, and Chrysler models are significant, but less than $500.

Simply put, KBB notes, this year supply is meeting demand for volume sellers.

The 2012 Toyota Prius. Image: Toyota

The 2012 Toyota Prius. Image: Toyota

On a model basis, the Toyota Prius One was selling at a whopping $2,500 less this year than it was last year. The Toyota Highlander is selling at about $2,000 below last year’s levels, while the Honda Civic and Honda Accord cost $1,550 and $1,450 less, respectively, this year. The Toyota Corolla, Nissan Sentra, Mazda3, Mazda6, and Nissan Maxima are also selling at more than $1,000 below last June’s levels.

Only for the Highlander, Corolla, and Sentra do factory rebates play a part in the lower transaction prices.

Affordability where it matters?

According to the last Comerica auto affordability assessment, consumers spent $300 more on new vehicles in the first quarter of 2012 compared to the same period last year, with affordability (relative to household income and finance costs) actually falling slightly.

But with these lower prices a relatively recent development, families looking for a new vehicle—not a luxury vehicle—will almost certainly find that the deals are getting better out there.

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