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Average new-vehicle transaction price hits a whopping new peak in December

Elevated prices for products and higher borrowing rates led to record high transaction prices for new vehicles in December, with the average cost in the U.S. rising to a record $49,507, according to data from Kelley Blue Book released today. The report notes that ATPs — average transaction prices — have climbed above suggested retail prices — MSRPs — for more than a year. Sales volumes were up in December on a year-over-year basis by more than 5%, a situation Kelley attributed to improved supply. Overall sales for 2022, however, were off 8% year over year. “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.” Industry analysts claim the most obvious headwinds in the new car market are generated by higher interest rates, forced by the Federal Reserve's rate hikes intended to tame inflation, and by generally limited inventory. A recent report from J.D. Power showed that the average monthly payment for a new vehicle loan in December was $718, up $47 from a year ago. But 16% of consumers in December took out loans with monthly payments of over $1,000. Consumers think vehicles, and electric vehicles especially, are way too expensive. Fortunately, manufacturersÂ’ incentives, all but extinct in the past two years, are returning, especially in the electric-vehicle and luxury market, the Kelley data suggest. Plus, "With the new tax credits on the way, electric vehicle ATPs will drop lower for qualifying vehicles,” Rydzewski said. Non-luxury brands, such as Honda and Kia, showed particularly strong performance in December, with the average price paid at $45,578 — a record high and an increase of $994 month over month. Meanwhile, the average luxury buyer paid $66,660 for a new vehicle last month. Mercedes-Benz and Land Rover showed the most price strength in the luxury market, transacting between 2.6% to 6.5% over sticker price. But luxury brands Audi, BMW, Infiniti, Lexus, Lincoln, and Volvo showed the least price strength with some discounting in effect, selling 1% or more below MSRP in December, according to the survey.

The most or nothing: Mercedes-Maybach S650 Cabriolet pushes the luxury limits

After the introduction of the Mercedes-AMG GT Roadster at the Paris Motor Show this fall, we informed you that Mercedes-Benz has a convertible conundrum, a surplus of drop-tops that seemingly threatens to self-cannibalize within the brand's ever-proliferating lineup. Benz's head of design, Gorden Wagener, who spends much of his time in Southern California, argues it's not a problem: Each convertible, in its ideal construction, would intrinsically vanquish any issues. "The bad is the enemy of the good," he said, not exactly quoting Nietzsche. Now, the three-pointed star brand has upped the top-down ante, with the unveiling this week at the Los Angeles auto show of the Mercedes-Maybach S650 Cabriolet, a vehicle so opulent, it sits in price and position atop the uber-luxury brand's current top-of-the-line offering, the $247,900 Mercedes-AMG S65 Cabriolet. View 24 Photos "Mercedes-AMG is our performance brand so it's all about performance stuff," says Wagener in a one-on-one interview on the roof of a Beverly Hills mansion just before the new car is unveiled. "Of course, Maybach has power, too, but it's the ultimate in luxury. So it's more on that side. And for me in the interior, it's the haute couture of the automobile, so we tried to up that a little more with details. And on the exterior, it's a more superb appearance up front, more chrome, more rich, and of course we tried to up that branding even more. The S-Class is the best car in the world, we consider, I always thought we could raise the Mercedes brand. And it's the same with the S convertible." Why does Mercedes-Benz need a flagship atop its flagship? Because, when climbing the mountain of automotive luxury there is always the customer who, when he or she reaches the pinnacle, wants more. A car brand, especially one with deep pockets and luxurious heritage like Mercedes, can always further gild the automotive lilies, creating a step up for those for whom the brand's motto, The Best or Nothing, is a literal life credo. "It's always our job to make it better," Wagener says. "Each little detail, the wood, the wood under cover of the cabriolet, the leathers. All the super luxury details that make a luxury car into a super luxury car. The key is to make a modern luxury design and not a traditional luxury design. There is definitely a market for traditional luxury, but we always wanted to have Mercedes, Maybach in particular, as a modern luxury car.

Dealers mobilize to protect their margins from automaker subscription services

Six individual auto brands — Lincoln, Cadillac, Porsche, Mercedes, BMW and Volvo — have established or are trialing a vehicle subscription service in the U.S. Three third-party companies — Flexdrive, Clutch and Carma — run brand-agnostic subscription services. And three automakers — Mercedes-Benz, BMW, and General Motors — have also launched short-term rental services. Dealers, afraid of how these trends might affect their margins, are building political and lawmaking campaigns to protect their revenue streams. So far, three states are investigating automaker subscriptions, and Indiana has banned any such service until next year. It's certain that those three states are the first fronts in a long political and legal battle. Powerful dealer franchise laws mandate the existence of dealers and restrict how automakers are allowed to interact with customers to sell a vehicle. On top of that, Bob Reisner, CEO of Nassau Business Funding & Services, said, "Dealers and their associations are among the strongest political operators in many states. They as a group are difficult for state politicians to vote against." In California earlier this year, the state Assembly debated a bill with wide-ranging provisions to protect against what the California New Car Dealers Association called "inappropriate treatment of dealers by manufacturers." One of those provisions stipulated that subscription services need to go through dealers, but that item got stripped out when dealers and manufacturers agreed to discuss the matter further. In Indiana, Gov. Eric Holcomb signed a moratorium on all subscription programs by dealers or manufacturers until May 1, 2019, to give legislators more time to investigate. Dealers in New Jersey have taken their campaign to the state capitol, asking that the cars in subscription programs get a different classification for registration purposes. Automakers run the current subscription services and own the vehicles. Sign-ups and financial transactions happen online or through apps, leaving dealers to do little more than act as fulfillment centers to various degrees, with little legal recourse as to compensation amounts when they're called on to deliver or service a car. That's a bad base to build on for business owners who've sunk millions of dollars into their operations.