The automotive industry has always been subject to economic trends and shifting consumer preferences. However, the last five years have been a whirlwind of unprecedented change. On average, new car prices have increased by about 37% in the last five years. But some automakers seem to have thrown caution to the wind, pushing their prices way beyond the average mark. We’ll explore the connection between car price inflation, new car inventory, changes in market share, and how YOU can use this information as leverage when negotiating new car deals.
Chrysler, Jeep, Dodge, and Ram Prices Have Risen 49% in 5 Years
Using the tools available through CarEdge Data, our team analyzed new car inventory as it relates to automaker price hikes over the past five years. Let’s take a look at the data, and then dig into what it all means:
|Make||Market Day Supply||5-Year Price Increase||Total For Sale||Total Sold (45 Days)|
|American Honda (Honda, Acura)||30||36.95%||106,400||157,619|
|Toyota Motor Corporation (Toyota, Lexus)||34||32.15%||211,876||281,179|
|Hyundai Motor Company (Hyundai, Kia, Genesis)||45||45.86%||172,398||170,848|
|Nissan (Nissan, Infiniti)||62||25.25%||130,413||94,153|
|GM (Chevrolet, Buick, Cadillac, GMC)||67||26.99%||354,980||237,414|
|Volkswagen Group (Audi, Volkswagen, Porsche)||80||37.37%||111,371||62,795|
|Ford Motor Company (Ford, Lincoln)||84||41.92%||322,959||172,241|
|Stellantis (Jeep, Dodge, Chrysler, Ram, Alfa Romeo, Fiat)||160||48.61%||346,985||97,782|
Leading the pack in price hikes is the Stellantis group, which includes brands like Chrysler, Jeep, Dodge, and Ram. These brands have collectively increased their prices by a whopping 48.6% over the past five years, which is more than double the overall economy’s inflation (21.5%) over the same period.
For example, the Jeep Grand Cherokee saw its MSRP surge by 23% within five years. This staggering increase has led to a concerning 180-day supply of new Grand Cherokees sitting idly on dealer lots, a clear sign of inventory buildup. With the current selling rates, it would take about half a year to clear the stock, while an ideal market condition strives for a 45 to 60 day supply.
Hyundai and Kia Prices Are Not Far Behind
Once synonymous with budget-friendly compact vehicles, Korean brands Hyundai and Kia have taken a different path over the past decade. The automakers are progressively moving towards premium and larger vehicles like SUVs and electric cars. Their intentions to be seen as premium brands have been evident, with prices of popular models like the Hyundai Elantra rising by 22% in five years. However, their move upmarket could be facing headwinds, especially with the recent loss of federal EV tax credits and the aggressive pricing strategy adopted by competitors like Tesla.
Subaru Prices Increased the Least
Contrasting the trend, Subaru seems to have taken a different strategy. With a five-year price increase of ‘only’ 25.1%, the automaker has managed to maintain an upward trajectory in terms of market share. This gain, paired with standard offerings like all-wheel drive, could be a testament to the importance of price competitiveness in the industry.
Prices Rise, Inventory Soon to Follow
No matter how we look at today’s auto market data, we can’t ignore a simple truth: when automakers raise prices substantially, it’s more than likely that cars will have a harder time selling. Surprise, anyone?
Not convinced? We pulled the data for each of the automaker’s top three models by sales. The story is the same:
Here’s the raw data for the top-selling models from each automaker.
|Make||Model||Market Day Supply (July 2023)||5-Year Price Increase|
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The data reveals a remarkable story of how price increases over the past five years have influenced the market share dynamics among leading automakers.
|Make||5-Year Price Increase||2018 Market Share (U.S.)||2022 Market Share (U.S.)||% Change in Market Share|
|Nissan (Nissan, Infiniti)||25.25%||11.00%||6.19%||-4.81%|
|GM (Chevrolet, Buick, Cadillac, GMC)||26.99%||17.40%||17.09%||-0.31%|
|Toyota Motor Corporation (Toyota, Lexus)||32.15%||13.90%||15.17%||1.27%|
|American Honda (Honda, Acura)||36.95%||8.80%||7.35%||-1.45%|
|Volkswagen Group (Audi, Volkswagen, Porsche)||37.37%||1.90%||3.60%||1.70%|
|Ford Motor Company (Ford, Lincoln)||41.92%||14.50%||13.92%||-0.58%|
|Hyundai Motor Company (Hyundai, Kia, Genesis)||45.86%||3.60%||10.94%||7.34%|
|Stellantis (Jeep, Dodge, Chrysler, Ram, Alfa Romeo, Fiat)||48.61%||12.30%||11.66%||-0.64%|
One of the clear outliers in this analysis is Hyundai Motor Company. Despite a hefty price increase of 45.86% in the past five years – one of the highest among all automakers – it managed to record an astounding growth of 7.34% in market share. This suggests that consumers see a strong value proposition in Hyundai’s offerings, possibly due to their aggressive push into the premium segment and focus on electric vehicles.
Subaru also stands out, with a comparatively moderate price increase of 25.14% over the last five years, while its market share rose by 0.59%. This could indicate that Subaru’s strategy of maintaining more reasonable prices in combination with its unique product positioning is helping it steadily grow its customer base.
Toyota and Volkswagen Group also managed to gain market share despite significant price increases, suggesting a strong brand appeal and product competitiveness that can withstand higher prices.
However, the data presents a starkly different scenario for other automakers. Notably, Ford and Stellantis, despite their substantial price hikes, have seen their market share slightly diminish. This may be indicative of the fact that consumers are becoming increasingly sensitive to price increases and are willing to explore other options that offer better value.
Nissan has had the most significant reduction in market share, losing 4.81% despite a relatively moderate price increase of 25.25%. This could be due to a combination of factors including competitive dynamics, product mix, or consumer perception of the brand.
This data suggests that while price is certainly a critical factor, other elements such as brand perception, product quality, and innovation also play a significant role in determining an automaker’s market share.
And then there are Ford and Stellantis, who together make up one quarter of U.S. car sales. Let’s take a closer look at that.
Are Ford and Stellantis Making a Huge Mistake?
While these automakers may argue that higher prices reflect higher quality, there is evidence that consumers are pushing back against these steep price hikes. Brands that keep their prices reasonable and affordable are gaining market share, while those with runaway price increases are witnessing a decline.
Jeep in particular is faltering right now. 2023 model-year inventory is through the roof, and about 10,000 of last year’s cars are still in need of an owner. As a brand, Jeep has a 153 day supply of new cars right now.
That means that at today’s average selling rate, it would take five months to sell it all, if not a single new vehicle was built.
Ford Inventory Is Piling Up FAST
Ford inventory is also filling up fast. Although Ford Motor Company as a whole has an 84 day supply, not too far beyond a ‘healthy’ standard of 60 days, the situation is different for some of Ford’s popular models.
The F-150 has a 113 day supply, and even the Explorer is now up to 112 days. Over at Lincoln, there’s now a 175-day supply of brand-new Lincoln Aviators.
For automakers and dealers alike, it’s not sustainable to have twice the typical lot inventory for very long. Hence, we expect more incentives to arrive any day now. But, you know what, maybe Ford shouldn’t have raised prices by 42% over just the last five years…
Ford and Stellantis, among others, seem to be distancing themselves from the middle-class buyer – a move that could potentially backfire in the long run. What happens if folks like us simply bring our business elsewhere? Perhaps they’re beginning to find out.
Find the Best Deals Where Dealers Are Hurting Most
For consumers, these industry trends present a unique opportunity. When the day’s supply of vehicles on dealer lots starts to climb, it’s often a sign that prices could soon be negotiable. Higher supply levels often push dealers to offer better deals to clear their inventory. Utilizing tools like CarEdge Data can give you a better idea of current inventory levels and help you determine where the best deals might be. Moreover, enlisting a CarEdge Coach can guide you through the car buying process, ensuring you’re equipped with the right knowledge and strategy to secure the best deal.
Remember, savvy car buying is not just about finding a car you love, but also about understanding the market dynamics at play. While prices might be rising, there are still opportunities out there for those willing to do the research and wait for the right moment. Stay informed, be patient, and the perfect deal might just be around the corner.