Average Transaction Price May Reach $41,378

The cost to buy a car shows no sign of easing, according to the latest findings from J.D. Power. According to a recent forecast, the firm expects new car transaction prices to reach an all-time high of $41,378 in August 2021. The company partially cites a "continued retraction in manufacturer incentives."

With Labor Day just around the corner, new car shoppers should expect to find a troubling combination of high car prices, dealer markups, and fewer incentives. Having said that, we're already seeing some surprises. Most recently, Ford slashed interest rates on the F-150 pickup to 0% for 72 months.

Chrysler has already responded by matching prices on the RAM 1500 late last week. Even all-new models like the 2022 Nissan Frontier already have 0% APR. Meanwhile, Audi is offering up to $11,500 in rebates on the A8 luxury sedan, one of the biggest discounts you can get on a car at the moment.

Those looking to delay a purchase by waiting till this fall may find fewer year-end deals because 2021 cars are already selling out. Interestingly, J.D. Power says the average finance payment appears to be rising at a slightly slower rate than average transaction prices.

While transaction prices are up 16%, the average loan payment is up 10%. The firm cites relatively low interest rates and high trade equity as the reasons why. Used car prices have seen record demand due to an ongoing inventory shortage in the new car market.

How transaction prices shape up as the inventory crisis worsens remains to be seen. Industry experts say supply issues could persist into 2022. Fortunately, there are at least some early signs of hope when it comes to manufacturer incentives ahead of Labor Day.

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