With 2020 now officially in our collective rearview mirror, last year’s Q4 sales figures are starting to come into focus. And while 2020 was marred by a global pandemic and a struggling economy here in the States, that didn’t stop people from spending some serious money on new pickup trucks and SUVs. According to a report from Edmunds, the average price of a new vehicle surpassed $40,000 for the first time in U.S. history last quarter.
According to Edmunds, the average new vehicle price reached its highest point ever during December, where it topped out at $40,573. The average new vehicle buyer borrowed $35,373 in Q4 of 2020, and would go on to place an average down-payment of $4,734. Compared to Q4 of 2019, those figures represent a hike of 5.5 percent and 9.4 percent, respectively. The monthly payments are up to, with the average buyer spending $581 at 4.6% APR for 70 months. That is up 1.2 percent from one year ago.
For reference, the median personal income in the United States was $35,977 in 2019 according to the Bureau of Labor Statistics.
While it may seem impossible for such a historic shift in pricing to take place during one of the worst economic periods in recent memory, the reasons behind this change have been growing for sometime. First and foremost, wealthy Americans were not as economically impacted by the pandemic as their fellow countrymen. This group showed no real signs of slowing down their buying practices during 2020, which could have played a role in dragging that figure up. Secondly, automakers are selling more SUVs and pickup trucks than ever before, which command a higher MSRP than a passenger car or hatchback.
In fact, IHS Markit states that 50 percent of all vehicles sales are SUVS, while pickup trucks account for an all-time high rating of 20 percent. Regardless of what automakers would like to tell you, this isn’t entirely a result of customer preferences. The profit margins on an SUV or pickup truck are substantially higher than those provided by passenger cars. This is even more apparent when customers begin loading their vehicles up with options, as Ford’s CEO Jim Farley has noted in the past. Perhaps this is the real reason why automakers continue to kill off their lower priced passenger car lineups.
Is pricing pressure a myth? Do stonks only go up? Let us know your thoughts on the matter in the comments below.