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Average new-vehicle transaction price hits a whopping new peak in December

Elevated prices for products and higher borrowing rates led to record high transaction prices for new vehicles in December, with the average cost in the U.S. rising to a record $49,507, according to data from Kelley Blue Book released today. The report notes that ATPs — average transaction prices — have climbed above suggested retail prices — MSRPs — for more than a year. Sales volumes were up in December on a year-over-year basis by more than 5%, a situation Kelley attributed to improved supply. Overall sales for 2022, however, were off 8% year over year. “The transaction data from December clearly indicates overall prices showed no signs of coming down as we headed into year-end,” said Rebecca Rydzewski, research manager of economic and industry insights for Cox Automotive. “Luxury prices fell slightly in December, but non-luxury transaction prices were up. Truck sales were particularly strong last month, and with many trucks selling for more than $60,000, a new record was all but inevitable.” Industry analysts claim the most obvious headwinds in the new car market are generated by higher interest rates, forced by the Federal Reserve's rate hikes intended to tame inflation, and by generally limited inventory. A recent report from J.D. Power showed that the average monthly payment for a new vehicle loan in December was $718, up $47 from a year ago. But 16% of consumers in December took out loans with monthly payments of over $1,000. Consumers think vehicles, and electric vehicles especially, are way too expensive. Fortunately, manufacturersÂ’ incentives, all but extinct in the past two years, are returning, especially in the electric-vehicle and luxury market, the Kelley data suggest. Plus, "With the new tax credits on the way, electric vehicle ATPs will drop lower for qualifying vehicles,” Rydzewski said. Non-luxury brands, such as Honda and Kia, showed particularly strong performance in December, with the average price paid at $45,578 — a record high and an increase of $994 month over month. Meanwhile, the average luxury buyer paid $66,660 for a new vehicle last month. Mercedes-Benz and Land Rover showed the most price strength in the luxury market, transacting between 2.6% to 6.5% over sticker price. But luxury brands Audi, BMW, Infiniti, Lexus, Lincoln, and Volvo showed the least price strength with some discounting in effect, selling 1% or more below MSRP in December, according to the survey.

2013 Honda Civic

Lather, Rinse, Repeat
On some level, it's hard to blame Honda for the strategy it took with its new-for-2012 Civic. Executives looked at the key players on the market as the model was being developed, soaked in the growing global economic malaise, and decided that if they wanted to make decent money on their small car, they'd have to find creative ways to take cost out of its build. In light of the financial crisis, consumers and critics would surely understand some belt-tightening in order to secure the company's legendary reliability, resale value and ease-of-use, right?
So Honda took a pass on expensive new technology - more complex transmissions, forced induction, active aero, and so on. And it also substituted in some cheaper interior materials, skimped on sound deadening, creature comforts and found lots of little ways to save money. Surely in a segment where the frankly ancient and moth-eaten Toyota Corolla has consistently ranked among the sales leaders, nobody would care, eh?

Honda adds 4.5 million vehicles to Takata recall, none in North America

The already massive Takata airbag inflator recall is getting 4.5-million units larger across the world. Honda is issuing an expansion to its safety campaign in many foreign markets. Of those newly affected cars, about 1.63 million of them are in Japan. None of these models are in North America. According to Reuters, Honda decided on this recall expansion after analyzing 1,000 inflators from vehicles not previously covered by its campaigns. The company found that the density of the gas-producing chemicals varied in them, which could cause a safety problem in the future. The models affected include foreign versions of the Fit and CR-V with production dates between 2007 and 2011, the Associated Press reports. Research suggests that Takata's inflators can be affected by exposure to moisture. This can cause the propellant to ignite too quickly and the component to shoot metal shrapnel when the airbag deploys. The issue has been linked to eight deaths worldwide, and there was a recent report of the issue causing a vehicle fire in a Nissan in Japan. The global inflator recall has had serious affects on Honda's books, as well. The Japanese automaker recently had to revise earnings from last year to account for an extra $363 million in costs from the campaigns and has been dealing with lawsuits over the issue. To improve quality, the company decided not to set sales goals through at least 2017. Honda last expanded the recall in Japan in late May to cover another 340,000 vehicles. It has also been searching for Takata's inflators in junkyards in the US. Related Video: