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Record For April As Demand Outpaces Supply Amid Microchip Shortage

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Demand Outpaces Supply Amid Microchip Shortage

Microchip Shortage

Automakers are altering product mixes and have packages to allow assembly lines to stay rolling amid the microchip shortage. that has to alter product mixes and have packages to allow assembly lines to stay rolling toward dealerships.

ASSOCIATED PRESS Key Facts

The average transaction price for a replacement vehicle within the U.S. reached $40,768 in April 2021, up 2.2% from April 2020, consistent with Kelley Blue Book.

Volkswagen transaction prices rose 9% over a year ago to $45,649, the most important increase of any automaker, followed by Honda, with average sale prices up 8.8% to $$32,035.

Tesla prices dropped10.3%, partly thanks to reductions for its Model X and Model Y, while Nissan prices fell 4.8%.

Sale prices for luxury full-size SUVs and crossovers had the most important year-over-year price increases, up 14.4% to $98,017, while electric vehicles (driven mostly by Tesla) showed the most important drop (down 10.8%).

Mark Schirmer, PR director at Cox Automotive, the parent of Kelley Blue Book, told Forbes that the transaction price – which is that the total asking price of a replacement car before seller rebates, fees, taxes, and other factors are mixed in — is now running about 2%-3% below asking price.

Crucial Quote

“Comparing the market to the present time last year when Covid-19 brought the [auto] industry to a halt, highlights a rise in demand, sales, and vehicle prices all have contributed to repeatedly rising transaction prices,” stated Kayla Reynolds, industry analyst at Cox Automotive.

Key Background

Record For April As Demand Outpaces Supply Amid Microchip Shortage best 1

Record For April As Demand Outpaces Supply Amid Microchip Shortage best 1

Price increases at Volkswagen were driven by average year-over-year price jumps of $3,000 for its two best-selling models, Atlas and Tiguan, while Volkswagen’s luxury brand, Audi, posted a 30% year-over-year increase within the average transaction price for A7, its second-highest-priced model at $69,200.

In contrast, Tesla has been cutting the costs of a number of its prominent models. In February, Tesla lowered the asking price of its Model 3 Standard Range Plus to $36,990 from $37,990 and cut the asking price of its Model Y Standard Range to $39,990 from $41,990.

Kelley Blue Book also said that price declines by electric vehicle makers have partly been caused by the introduction to the market of “more affordable electric vehicles” just like the Volkswagen ID.4 (list price $39,995) and Mustang Mach-E ($42,895).

Kelley Blue Book estimated that the transaction prices of Tesla’s two costliest brands, Model X and Model Y, fell by 9% from last year. Overall, Schirmer said auto prices are now “clearly elevated… thanks to low supply [partly thanks to the worldwide microchip shortage] and high demand.”

Surprising Fact

While the April 2021 average transaction price of $40,768 set a replacement record for the month of April, it had been in need of the general record of $41,335 established in December 2020. “Transaction prices for brand spanking new vehicles typically peak within the month of December, as luxury vehicles normally grab an outsized portion of the market at the top of the year,” Schirmer told Forbes, adding that bonus season on Wall Street may accelerate such sales during the vacations.

What to observe For

A recent survey by Kelley Blue Book revealed that despite high prices, 60% of prospective buyers aren’t getting to delay the acquisition of their next new car, suggesting continued strong sales, following 1.52 million vehicles sold in April, a replacement record for that month.

“Shoppers expect high prices and limited choices, and that’s exactly what they’re finding,” stated Vanessa Ton, senior industry intelligence manager at Kelley Blue Book.“Consumers are clearly in buy-now mode, likely fearing even less choice and better prices within the months ahead.

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