The number of new cars being sold is from record levels, but the prices being paid for them are the highest ever.
According to the J.D. Power and LMC Automotive Forecast, the average transaction price for a new vehicle is projected to be $41,044 during the month of July, a 17% increase over last year.
High demand is meeting low inventories caused by the ongoing semiconductor shortage hampering production across the industry, which has led to a drop in incentives and more cars selling at or even above list price.
Cars are turning off dealer lots more than twice as quickly as they were in 2019, before the coronavirus pandemic began to cause issues for the industry and used car prices have seen a similar jump.
HOW SOON WILL USED CAR PRICES DROP?
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One bright spot for car owners is that trade-in values are also on the rise, hitting an average of $7,501 in July, up from $3,353 a year ago. This, combined with low interest rates, means the average monthly finance payment has only increased 6.4%, or $38.