It often seems like the automotive market is catering to wealthy buyers. That’s because that’s pretty much exactly what’s happening. The average transaction price for a new car is hovering just under $50,000 (effectively more than that when factoring in destination fees). For pickup trucks such as the Ford F-150, that number is close to $65,000. One telling sign of what’s happening in the broader car market is that there are nearly twice as many vehicles on sale for more than $100,000 as there are for less than $30,000.
According to numbers cited by CNBC, there are currently 33 vehicles for sale in America with a starting MSRP above $100,000. That’s substantially more than the number of cars for sale with a starting MSRP under $30,000, which is now just 18 vehicles. The share of cars sold over $50,000 has doubled since 2019.
It’s essential to note that some of that is due to inflation. The $30,000 threshold does not mean what it once did. The Volkswagen Golf GTI, for instance, now starts above $30,000. Its starting MSRP of $32,554 has increased from its $27,595 starting price in 2019. However, it has increased at a rate less than inflation, so it is effectively less expensive than it was. That said, the figure is still telling.
Manufacturers pivoting toward wealthier buyers does not come as a great surprise. Affluent buyers are the ones spending money at the moment. The top 10 percent of US. earners now account for nearly 50 percent of consumer spending in the economy as a whole. Automakers (that aren’t Tesla) also face pressure from shareholders to generate profits. Luxury SUVs and trucks create a lot more per vehicle profit than budget models.
Ford debuted its “Ready Set Ford” campaign. The brand says that it wants to pivot away from “sameness” and merely “making cars that get from point A to B.” Ford says it is “re-committing to passion vehicles.” That sounds great, but the subtext is less so. Ford, the automaker that invented automobile transport for the masses, is now shifting even harder toward high-profit vehicles at the expense of offerings like the Fiesta, Focus, and Fusion. The Maverick compact pickup is now the only Ford with a starting MSRP below $30,000, and even then, it’s barely under.
Automakers’ responses to the market make sense. Brands need to tailor their offerings to maximize revenue from the actual customers who purchase their cars. And you get a feedback loop. Wealthier customers are buying cars. That creates an incentive for manufacturers to build more of the vehicles they buy: luxury SUVs and trucks with expensive option packages.
That pivot could leave automakers very vulnerable if the economy turns. Wealthy buyers are spending because broader economic uncertainty has not affected them. The stock market has been soaring over the past few years. Home prices have risen dramatically. Wealthy buyers feel flush with cash. But if that relatively small percentage of buyers gets spooked by some economic hiccup, it could have a disproportionate impact. And a production plan focused on pumping out high-end, option-laden, fuel-inefficient enthusiast cars would look far less optimal.
Source: CNBC, Marketplace, in2013dollars.com
We want to hear from you! Share your opinions in the thread below and remember to keep it respectful.
Your comment has not been saved
This thread is open for discussion.
Be the first to post your thoughts.

source