ALG, Inc., a subsidiary of TrueCar, Inc. and the industry benchmark for determining the future resale value of a vehicle, projects average transaction prices (ATP) to be up 5.7% or $1,986 from a year ago and up 2.0% or $713 from March 2020.
“Despite our expectation that retail sales volume will be cut in half in April due to the impact from COVID-19, average transaction prices continued their upward trajectory, hitting record highs this month,” said Eric Lyman, Chief Industry Analyst for ALG, a subsidiary of TrueCar. “This is primarily due to the enticing zero percent interest rates being offered by automakers offsetting any model or trim concessions car buyers would be forced to make otherwise.”
“These loans have been particularly popular with domestic truck shoppers,” added Lyman. “U.S. manufacturers, such as Ford and GM, and their captive finance companies were one of the first to launch zero percent interest rates on 84-month loans and those brands are seeing some of the sharpest upticks in average transaction price year-over-year. That said, Hyundai had the biggest year-over-year gain in average transaction price, with a 12.8% increase. This is mainly due to the redesigned Sonata and the widely popular, three-row, Palisade.”
ALG projects that U.S. revenue from new vehicle sales will reach more than $23.6 billion for April 2020, down 49.4% (based on a non-adjusted daily selling rate) from a year ago and down 34.3% from last month.
“Incentives are expected to be up nearly 20% year-over-year for April as automakers look to provide more support and relief for car buyers” said Nick Woolard, Director of OEM and Affinity Partner Analytics at TrueCar. “While cash incentives are up as well, we’ve observed a shift in incentives toward deeper finance support since mid-March when COVID-19 began to impact personal and economic activity.”
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SOURCE: TrueCar
