IRVINE, Calif. — The estimated average transaction price for light vehicles in the United States reached an all-time record high of $35,309 in December, according to Kelley Blue Book (KBB). This increase, the auto firm added, amounted to a 1.5% increase over the same time last year.

Virtually all vehicle OEM recorded increases in average transaction prices, with Fiat Chrysler, Ford Motor Co. and Nissan North America leading the way. However, KBB noted that just as new prices have grown, so have incentives.

“Even though transaction prices are at an all-time high, incentives have grown similarly to counterbalance the increased prices,” said Tim Fleming, analyst for Kelley Blue Book.  “Higher average transaction prices are reflective of the rapid shift in consumer demand away from cars and into trucks and utility vehicles, which are more expensive. Should the sales mix of cars to SUVs reach a stable point in the near future, actual transaction price growth could match or fall just short of inflation.”

For Fiat Chrysler, average vehicle transaction prices rose 3.3%, driven primarily by the automaker's Chrysler, Dodge and Jeep brands. The strength of the Pacifica minivan propelled average transaction prices for the Chrysler brand up 10%, as did fewer sales of the brand's 200 Sedan. The Dodge brand was up 5% on a lower mix of its compact car, the Dart, and strong performance from the Charger. The average for the Jeep brand was up 2% thanks to a strong month from the refreshed Grand Cherokee.

“December was an interesting month for FCA. Though the Jeep and Ram brands are up, incentives are high, and vehicles such as the Cherokee saw big drops. Jeep has to hope its 2017 redesigns can stem some of the bleeding and help reduce incentives,” said KBB analyst Akshay Anand. “Alfa Romeo and Fiat continue to be drags on FCA, with Alfa’s volume still next to nothing and Fiat continuing to decline in sales. The Pacifica was a great story for Chrysler, but the brand still needs more models in order to become a player.”

Essentially matching Fiat Chrysler’s growth rate, Ford Motor Co. realized a 3% rise in its average transaction price for December. The main drivers were the automaker's Explorer, Escape and Fusion, which saw their transaction prices climb by 11%, 3%, and 4%, respectively. The Lincoln brand's average transaction price rose 3% increase due to the Continental $57,156 average transaction price.

Nissan North America realized the biggest year-over-year increase among all the OEMs, with its average transaction price rising 5.9% over the same time last year, according to KBB. Michelle Krebs, senior analyst for AutoTrader, noted that the brand’s growth was driven in large part by the success of its Nissan Rogue sport utility, which benefited from the advertising tie-in with Rogue One: A Star Wars Story.

“Appealing products, incentives, and financing likely drove the industry to another record year in 2016. A three-peat is possible (if not probable) if Wall Street, consumer confidence, and the economy continue to respond favorably to the incoming administration. There are a lot of old cars on the road still and a lot of new technology awaiting shoppers in today's showrooms,” said Rebecca Lindland, senior analyst for Kelley Blue Book.

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Kate Spatafora

Kate Spatafora

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Kate Spatafora is the Associate Publisher for MG Business Media.

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