Shoppers Are Willing To Pay Over Sticker Price For New Vehicles

By

Automotive Editor

Based out of the Washington, D.C. area, Joel Patel is an automotive journalist that hails from Northern Virginia. His work has been featured on various automotive outlets, including Autoweek, Digital Trends, and Autoblog. When not writing about cars, Joel enjoys trying new foods, wrenching on his car, and watching horror movies. 

Follow On: Twitter

, Automotive Editor - May 18, 2021

Consumers looking to purchase a new vehicle have run into the perfect storm. The chip shortage and insane demand have made it incredibly difficult for consumers to purchase a new vehicle. While we’ve seen a lot of consumers shift toward purchasing a used vehicle, which has caused that market to explode, some have decided to stick with purchasing a new vehicle. Furthermore, they’re willing to pay over MSRP for a new vehicle.

According to research conducted by Kelley Blue Book, four out of 10 consumers are willing to pay above MSRP to get a new vehicle amid the chip shortage and lack of inventory. Those same consumers are willing to dish out an extra 12% premium over MSRP. As Cox Automotive points out, the average MSRP for a new vehicle was $41,950 in April, so those four out of 10 consumers are ready to pay $5,000 over sticker price to get into a new vehicle now instead of waiting for the shortage to end.

Car shoppers these days have access to more helpful tools than ever before. So, they can get an idea of how much vehicles should cost and how good of a deal they’re going to get before stepping foot into a dealership. Still, this isn’t deterring some shoppers, as they’re prepared to pay extra. Cox Automotive believes it’s a proactive precaution. Shoppers are scared that choices will continue to dwindle and prices will continue to rise as the months pass by. It’s a similar situation with the housing market.

Honda CR-V

“Consumers are clearly in buy-now mode,” said Vanessa Ton, senior industry intelligence manager at Kelley Blue Book, “likely fearing even less choice and higher prices in months ahead.” Ton believes consumers may have a point as we head into summer. “Heading to Memorial Day weekend and the start of summer, when popular SUVs and pickups are in high demand, it will only get more competitive in the near term.”

While some consumers are ready to pay over MSRP for a new vehicle, others aren’t. Research indicates that 37% of shoppers are planning to postpone their new vehicle purchase. Of those shoppers, 70% are planning to put off their purchase for roughly three months, while 23% are willing to purchase a used car instead of a new one. Not many shoppers are looking into switching what kind of vehicle they want to purchase.

This research is the opposite of what we expected would happen after last year. The COVID-19 pandemic affected millions of people in the U.S. Millions of Americans lost their jobs and the stimulus checks were barely enough for a lot of people to pay their rent. So, it seemed like buying a new car was the last thing people were worried about. Apparently, that’s not the case.

Additionally, it’s peculiar, because automakers aren’t offering many incentives or rebates on new vehicles and have even started to cut features from new cars because of the chip shortage. So, consumers are willing to pay over MSRP for a new vehicle that won’t have new vehicle features. It’s a bit of a head-scratcher, but after the battle to get toilet paper last year and, more recently, gas, people are willing to go to extreme lengths once panic sets in.

Explore current new car deals »

, Automotive Editor

Based out of the Washington, D.C. area, Joel Patel is an automotive journalist that hails from Northern Virginia. His work has been featured on various automotive outlets, including Autoweek, Digital Trends, and Autoblog. When not writing about cars, Joel enjoys trying new foods, wrenching on his car, and watching horror movies. 

Follow On: Twitter

Privacy Policy|Do Not Sell My Personal Information|Terms of Use|Cookie Policy|Disclaimer|
COPYRIGHT 1999-2021 MH Sub I, LLC dba CarsDirect.com