New Cars Are More Expensive Now But That's In Part Because Of Luxury

Luxury cars represent a higher percentage of new sales than they used to.

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What do you think the average price of a new luxury car was in December? If you guessed $64,864, you are right.

That, according to Bloomberg, is over $20,000 more than the $43,072 average for a “non-luxury vehicle,” which is still very high. More interestingly, though, Bloomberg also says that, increasingly, luxury cars are a bigger slice of the market, period. This means when you see stats about the average price of new cars shooting up, you can think of it as a phenomenon of both cars getting more expensive in general and also one of which cars people are buying, specifically.

Last month luxury cars sold for a record-setting $1,300 more on average than their sticker price, while in December 2020, they sold for $3,000 less than MSRP. Chip shortages, a surge in holiday spending, and the spread of the Covid-19 omricon variant were the biggest factors in the disparity, analysts say. Affluent consumers were not discouraged.

“The luxury buyer has probably had a pretty good ride in the last couple of years,” says Charlie Chesbrough, a senior economist for Cox Automotive. “Their portfolio is probably doing well. Their income is probably doing well. That is the reason we are seeing such strength.” Indeed, the global catastrophes of the past year have served to make the rich richer.

The trend will continue, Chesbrough says. In December 2016, upscale vehicles sold by such brands as Audi, BMW, Mercedes-Benz, and Porsche made up 15.5% of the U.S. market, according to KBB. Last month they accounted for 18.4%. In 2012, 54% of new vehicles sold had an MSRP below $30,000, according to Cox Automotive. Today that percentage sits at 19% of the market, he says: “Where the market is moving to is much higher-priced categories.”


This has been happening for some time now, though automakers simply leaving the small car business in America has surely also accelerated things. Ambiently, depending on where you live, you might have noticed the shift, too, with a Mercedes or BMW or Audi more common these days in America than ever before. The rich are getting richer, but so are the sort of rich. The only enduring mystery here is how Lincoln and Cadillac somehow managed to miss out.