It is already tough for a number of people to afford a new vehicle as the average transaction price keeps rising. According to Kelly Blue Book, the average transaction price for November rose 2.1 percent to $36,978. This isn't being helped by American automakers deciding to stop producing cars due to changing consumer tastes. This was brought to light last week when General Motors announced that it would be cutting a number of cars including the Chevrolet Cruze. Most automakers and dealers believe consumers will move towards utility vehicles, but some dealers believe that consumers may defect from American automakers because they don't offer the vehicle they are looking for.
Chad Martin, a Bowling Green, Ky., dealer tells Automotive News that consumers feel the "affordability pinch" when automakers decide to drop cars to focus more on utility vehicles. For the most part, consumers "generally seem to be shopping for a particular type of vehicle, such as compact cars." Remove them out of your lineup and consumers are likely going to look elsewhere.
"What this is going to mean is, you're going to see a somewhat higher defection rate because you don't have the product lineup that particular consumer wants," said Martin.
Another big hurdle facing consumers who want to stick with the domestics is pricing. Martin explained that there is more than a $5,000 difference in pricing between compact crossovers and compact sedans.
Obviously, the consumer is going to have to absorb that $5,000 difference," said Martin.
The numbers from Kelly Blue Book tell the story.
- Compact Car Average Transaction Price: $20,458
- Subcompact Crossover/SUV Average Transaction Price: $24,210
- Compact Crossover/SUV Average Transaction Price: $28,765
Jeremy Acevedo, Edmunds' manager of industry analysis agrees with the sentiment said by some dealers that consumers loyal to a segment may look elsewhere.
"It's easy for shoppers to move from a Cavalier to a Cobalt to a Cruze. But it's a whole different ballgame moving from a car to an SUV."
Source: Automotive News (Subscription Required)