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Wednesday, February 1, 2023

Average New Car Prices Hit Record High of N25.65 million

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New car prices hit a new all-time high in September due primarily to snarled supply chains, according to Kelley Blue Book.

At $45k or N25.65 million (N570/$1), the average transaction price for a new car was up 12.1% (or $4,872) from one year ago in September and monthly up 3.7% (or $1,613) from August.

“The record-high prices in September are mostly a result of the mix of vehicles sold,” said Kayla Reynolds, an analyst for Cox Automotive.

“Midsize SUV sales jumped in September compared to August, and full-size pickup share moved up as well. Sales of lower-priced compact and midsize cars, which had been commanding more share during the summer, faded in September,” Reynolds said.

All-time-high prices come as the entire industry endures a slowdown in sales. Total sales last month were approximately a million cars, a 7.3% monthly decrease, and one of the lowest volumes in the past decade.

Dwindling sales are likely a function of two things, a worldwide shortage of microchips that have shuttered many automobile factors and possibly higher prices are creating demand destruction among buyers.

Over the last year, dealership inventories have been tight due to supply chain difficulties and forced dealers to reduce incentives and discounts to prospective car buyers. Incentives were only 5.2% of the average transaction price last month, compared with 10% a year ago.

Another issue for buyers is the staggering increase in used cars, which hit a record high last month.

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