New car prices continue to surge as consumer demand remains high -- and automakers contend with low inventory levels. According to the latest data from Kelley Blue Book, the average price car buyers paid for a new vehicle hit a record of $47,077 in December 2021. That figure is up $5,742 year-over-year and grew month-over-month by $808 compared to November 2021.
With such limited supply, dealers continue to sell new cars at or well above the manufacturer's suggested retail price, which lends to the inflated new car prices. However, KBB said the near-$50,000 figure is also due to December's incredibly strong luxury vehicle sales: It's not uncommon for luxury vehicle sales to tick up at year's end. During the final month of 2021, 18.4% of all vehicles sold came from luxury brands; the average price a buyer paid for a luxury car sits at $64,864. December sales also snapped a six-month decline in the sales pace, according to KBB, due to those luxury vehicles.
Now, taking luxury cars out of the equation, the average price of a new vehicle is still an absurd $43,072. KBB data showed the average price is down compared to November 2021 data, but it remains $900 above MSRP. In the last six months of 2021, the average price buyers paid was also above a car's MSRP.
All of this price inflation comes as the pace of new car sales remains incredibly slow: Dealers and automakers aren't selling nearly as many cars as they're used to, but profit margins are healthy due to the inflated prices.