Good News, Bad News: Transaction Prices Climb, But So Do Incentives

December 5, 2012

There's good news and bad news for auto shoppers.

Let's get the bad news out of the way: transaction prices are climbing. In fact, they're as high as they've been all year. 

According to TrueCar, the average price for a new vehicle in November 2012 was $30,832. That's up about $335, or 1.1%, from November 2011.

The highest transaction prices were found at Volkswagen and Audi dealerships: $33,610. General Motors ($32,891) and Ford ($32,543) were close behind. 

At the other end of the scale, we find Hyundai and Kia ($22,342). There's a wide gap separating those two from next-to-lowest Honda and Acura ($26,897). 

Why are prices heading skyward? TrueCar senior analysts Jesse Toprak says that it's in part because consumers are opting for more high-tech bells and whistles: " Automakers are getting better at providing all the modern conveniences consumers come to expect for more of their models, resulting in higher overall prices hence improved profitability."

And the good news? 

Incentives are climbing, too. As of last month, the average incentive for U.S. vehicles was $2,764. That's up $117 (4.4%) from November 2011 and a hefty $447 (19.3%) from October of this year.

Bargain hunters will have their best luck at Nissan and Infiniti dealers, where the average incentive tops the scale at $4,273. GM dealers come in second at $3,720, relieving some of the pain of GM's high transaction prices. 

At $1,586, Hyundai and Kia have the lowest incentives -- perhaps not surprising, considering their low transaction prices.

On the whole, however, the news is mostly good for consumers. TrueCar says that the ratio of incentives to transaction prices is edging upward: it hit 9.0% last month, up from 7.6% in October. Given the vast number of sales events that typically take place before the end of the calendar year, we'd expect to see that figure creep even higher before the new year. 

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