September 19, 2006

New vehicle mid-year price hikes a thing of the past, J.D. Power reports

Westlake Village, California – Competitive pressures are nearly eliminating new-vehicle price increases during a model year, according to a report by J.D. Power and Associates Power Information Network (PIN). The report uses real-time retail transaction data and does not include fleet sales.

The report says that during the 2006 model year, actual new-vehicle retail transaction prices for 44 of 50 high-volume models have declined. The prices for the remaining six models have increased slightly since the beginning of the year, but four of those six had an actual retail transaction price increase of less than two per cent.

“The midyear price increases to cover increased costs, once commonplace in the industry, have disappeared,” says Tom Libby, senior director of industry analysis at PIN. “Intense competition, fueled in part by the continued expansion of Asian and European manufacturers into new segments, as well as shortened product life cycles that are bringing new models to market faster than ever, has kept downward pressure on new vehicle prices.”

There are more than 286 new vehicle models currently available in the U.S. market, compared to 257 five years ago. The 50 models used in the analysis represent 48 per cent of total U.S. new vehicle sales volumes and cover a wide array of body types, manufacturers and brands. PIN found that the only instances in which prices generally rise are when a model is replaced with an all-new design, or when a new model year begins.

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