Thursday, 26 May 2022 14:49

Average New-Vehicle Price, Monthly Loan Payments Set New Records


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New-vehicle prices continue to set records, with the average transaction price expected to reach a May record of $44,832---a 15.7% increase from a year ago and the third-highest level on record despite rising interest rates, according to J.D. Power.

Average interest rates for new vehicle loans have risen. The average interest rate for loans in May is expected to increase 62 basis points from a year ago to 4.92%.


However, elevated used-vehicle values continue to help affordability for new-vehicle buyers who have a vehicle to trade in. The average trade-in equity for May is trending towards a record of $9,922, a 59.4% increase from a year ago.


“Even with elevated trade-in values, the average monthly finance payment is on pace to hit a record high of $687, up $90 from May 2021," said Thomas King, president of the data and analytics division at J.D. Power. "That translates to a 15.1% increase in monthly payments from a year ago, which is just below the 15.7% increase in transaction prices.


"The growth in transaction prices means that, even though the sales pace is down 20.9% year over year, consumers will spend $45.4 billion on new vehicles this month, the second-highest level ever for the month of May but down 15.5% from May 2021," King said.


Due to the lack of inventory, discounts from manufacturers continue to be sparse. For May, the average incentive spend per vehicle is $965, a decrease of 64.6% from a year ago.


Incentive spending per vehicle expressed as a percentage of the average vehicle MSRP is trending toward a record low of 2.1%, down 4.4 percentage points from May 2021 and the fourth consecutive month below 3.0%.


One of the factors contributing to the reduction in incentive spending is...

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