Average transaction prices for new models set new high

IRVINE, Calif. - 

The risk auto finance companies absorbed when taking on new-vehicle paper certainly didn’t wane as 2017 closed.

On Tuesday, analysts at Kelley Blue Book reported the estimated average transaction price (ATP) for light vehicles in the United States came in at $36,113 in December. New-car prices increased by $583 (or 1.6 percent) from December 2016, while climbing $66 (or 0.2 percent) compared to the previous month.  

“Average transaction prices closed the year on a strong note, rising nearly 2 percent in December 2017 to set a record high,” said Tim Fleming, analyst for Kelley Blue Book. “Incentive spending was a concern in 2017, averaging 10.4 percent of MSRP, but encouragingly, this figure held relatively flat over the final quarter of the year.

In 2018, interest rate hikes could be another concern, as they threaten to increase monthly payments for consumers,” Fleming continued. “However, Kelley Blue Book anticipates they will help contribute to another down year of new-vehicle sales more than impact prices, which have steadily risen along with the economy since the recession.”

Transaction prices for all of 2017 also finished 2 percent higher than the previous year.

Earlier last month, Kelley Blue Book’s colleagues at Cox Automotive took an in-depth look at what rising interest rates could do immediately after the Federal Open Market Committee (FOMC) at the Federal Reserve opted to push the target range for the federal funds rate higher by another 25 basis points to leave the reading at 1.25 percent to 1.50 percent.