Average New-Vehicle MSRP Tops $28,000 for First Time Ever; Transaction Prices, Even After Big Incentives, Still Highest on Record

BANDON, Ore., April 29 -- Big incentives are enticing a growing number of new-car buyers into better equipped and higher priced models, according to CNW Marketing Research.

In April, the average sticker price of vehicles sold to consumers topped $28,000 for the first time in history, up nearly 9 percent from a year ago. Even after massive incentives, the price of vehicles climbed more than 4 percent.

Industry wide, however, sticker prices for comparable vehicles are up only 1.1 percent indicating a richer mix of models is being bought.

"The vast majority of new-car buyers are using at significant part of record incentives as a way to move up a notch or two in the vehicle they select," said Art Spinella, president of CNW. "For every $1,000 worth of incentives, consumers are spending at least a third on upgrades ranging from leather seats to custom wheels. The rest is being used as additional down payment in order to lower monthly payments."

One important and disturbing trend has been reversing course, however.

For nearly a decade prior to June of 2000, the inflation-adjusted income of new-car buyers was in the $60,000 to $63,000 range. This rose dramatically as the U.S. economy wobbled and left the auto industry selling to higher income consumers. The average income ballooned to more than $75,000 in October of last year.

That figure subsided to slightly over $69,000 in April, but remains 12 percent higher than a year ago.