Average New-Car Purchase Price Rises in 2010

According to a report done by Detroit Free Press, The average purchase prices of new cars has risen from $28,160 in 2009 to $29,217 in 2010, an increase of about 3.75%.  This is due to several factors, including new technology, different buyers and less incentives.

These reasons all make sense, since generally, only the most qualified buyers are buying cars right now, as they are the most economically stable.  In addition, BlueTooth, GPS navigation and iPod integration are some of today’s most popular options, which many automakers have been striving to add or improve in their cars.  Click here for a list of many of today’s options and how they work.

2010 Ford Fusion Hybrid

Meanwhile, since sales volume is down, automakers have to concentrate on selling better-equipped models to make up the difference, which has also led to higher quality cars.  Options, and option packages, are the biggest profit makers when selling a car.  Whereas the profit margin on a base model family sedan can be under $2,500, the profit margin on an option package including a moonroof, upgraded stereo and GPS navigation for about $3,000 adds another $1,500 or so to the bottom line.

The real winners in this new report are the Detroit 3 – Chrysler, Ford and GM.  While their competitors are all below the industry average, Ford and GM are well above it.  Chrysler is only $7 per car short of the average, but still $2,256 higher than rival Toyota.  This can be attributed to better quality and glowing reviews to many new Ford and GM models, while Toyota’s recalls have forced them to increase incentives to buyers to keep from losing them.

2011 Hyundai Sonata

Catching up is what Hyundai has been doing for years, and a 6.4% increase in their purchase prices from 2009 to 2010 means they get the “most improved” award.  With the new 2011 Sonata sedan and 2011 Tucson SUV, Hyundai is poaching competitor’s buyers left and right.

With sales looking to be higher in 2010 than in 2009 by a significant margin, and new models being delivered by all of the companies included in the report, look for these purchase prices to continue rising, especially for Ford, GM and Hyundai.

by John Suit

Source: Detroit Free Press; Image Source: Edmunds.com

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