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Vehicle Prices Affected by Early New Model Year Introductions, According to Edmunds.com

August 27, 2003

The average automotive net price -- new vehicle transaction price adjusted for incentives - was $24,179 in July 2003, 16.6 percent below the average sticker price of $28,990, according to Edmunds.com (www.edmunds.com), an online resource for automotive information. In June 2003, the average net price was 16.4 percent below sticker, and in July 2002 the average net price was 14.9 percent below. The domestic nameplates experienced a significant gain of $437 to $23,440 in net price this month, largely due to their many recent 2004 model year vehicle introductions. Here are some other salient facts about the 2004 model year introduction:By the end of July 2003, manufacturers had introduced a total of 85 year 2004 models, and sales of 2004 models constituted 10.3% of total market share in that month. In contrast, by the end of July 2002 only 64 year 2003 models had been introduced, and sales of those new models constituted only 7.5 percent of the market. Days-to-turn, which measures how many days on average it takes to sell a vehicle after it hits the dealer's lot, was 29 days for 2004 model year vehicles at the end of July 2003, compared to 22 days at the end of July 2002 for 2003 model year vehicles. Incentives for 2004 model year vehicles averaged $1,458 in July 2003, more than twice the $590 average incentives on 2003 model year vehicles offered last July. The average net price for 2004 model year vehicles sold in July 2003 was $25,907 while the average net price for 2003 model year vehicles sold in July 2002 was $27,129, a decrease of 4.5 percent - while the while the average sticker prices were about the same. "Automakers hope to gain market share by utilizing earlier new model introductions as a competitive advantage, hooking buyers before their competitors' products become available," said Dr. Jane Liu, executive director of Data Analysis for Edmunds.com. "But these market share gains are being made at a cost: lower net prices, longer inventory turn-over times and record high incentives for most new models. The exceptions are those that enjoy high consumer demand, such as the Nissan 350Z, Scion xA and xB, Toyota Sienna and Volkswagen Touareg." According to Edmunds.com, it is likely that the model year 2004 vehicle introductions are also contributing to reduced demand for the 2003 models, and therefore lowering the average price of new cars. From June to July 2003 the Edmunds.com New Vehicle Price Index declined by 0.3 percent to 96.9 (base = 100 set in January 2002). The July 2003 index was largely unchanged compared to that of July 2002. The sports cars segment was the only one that posted gains in July: luxury sport cars went up by 0.7 percent while all other sports cars saw an average increase of 1.3 percent. Luxury SUVs had the most significant decline from the prior month, 1.5 percent, followed by large trucks at 1.1 percent. This data was released with the Edmunds Price Index for new vehicles (EPI-N), which reflects price shifts for the industry as a whole, and can be analyzed by different market segmentation. Similar to the Consumer Price Index, the EPI-N measures the average changes in retail prices for a fixed basket of new vehicles with fixed options over time for the purpose of trend analysis. Edmunds.com also analyzes transaction prices and net prices by country of origin, manufacturer, make and model, reflecting manufacturer-to-consumer rebates, including low APR and special lease programs. About Edmunds.com, Inc.Edmunds.com is an online resource for automotive information. Its comprehensive set of data, tools and services, including Edmunds.com True Market Value® pricing, is generated by Edmunds Data Services and is licensed to third parties. The company is headquartered in Santa Monica, California and maintains a satellite office in Troy, Michigan.
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