FOR IMMEDIATE RELEASE
Edmunds Price Index (EPI) Reveals Automotive Model Year Trend That Hurts Industry, Helps Consumers
SANTA MONICA, CALIF. - November 22, 2004 - Edmunds.com, the premier online resource for automotive information, has identified an automotive sales trend: an increasing number of previous model year vehicles remain on dealer lots well after the new model year vehicles have arrived. "As a rule, the longer a vehicle sits at a dealership, the better the deal a savvy consumer can get for that vehicle," states Phil Reed, author of Edmunds.com's Strategies for Smart Car Buyers.
Previous model year vehicles are making up an increasingly high percentage of new vehicle sales late in the calendar year. In October 2004, 54% of new vehicles sold were 2004 models. In October 2003, 45% of the new vehicles sold were 2003 models. In October 2002, 31% of the new vehicles sold were 2002 models.
"Many new model year vehicles are being introduced earlier each the calendar year, creating more competition for the previous model year vehicles, which in many cases are already in an oversupply state," observes Dr. Jane Liu, Vice President of Data Analysis for Edmunds.com.
The average days-to-turn, which measures how many days on average it takes to sell vehicles after they arrive at dealerships, was 114 days for 2004 model year vehicles and 29 days for 2005 model year vehicles in October 2004. The average days-to-turn overall was 75 days, compared to 82 in September 2004 and 69 in October 2003. Of all brands, Isuzu had the longest days-to-turn, 141 days, followed by Mitsubishi, 127 days. Mini enjoyed the quickest inventory turnaround, averaging 14 days, followed closely by Lexus at 19 days.
Last month, the sales-weighted average new vehicle sticker price was $30,371, $268 higher than in September 2004 and $704 higher than in October 2003. The sales-weighted average net price was $25,750, $933 higher than in September 2004 and $518 higher than in October 2003. Average discount from MSRP to net price was $4,621 or 15.2%, down from $5,287 in September 2004.
In October 2004, average discount from MSRP to net price for the 2004 model year vehicles was $5,970. In October 2003, average discount from MSRP to net price for the 2003 model year vehicles was $5,489. This means that consumers averaged $481 more savings for the previous model year vehicles last month than they did in the same period last year.
Conversely, consumers are now receiving smaller discounts for new model year vehicles than they did a year ago. The discount for 2004 model year vehicles sold in October 2003 was $3,589, while the discount for 2005 model year vehicles sold in October 2004 was $3,017, indicating that consumers averaged $572 less savings this year for new model year vehicles.
"Several 2005 model introductions were particularly successful, keeping incentives spending comparatively low," said Dr. Liu.
The Edmunds Price Index for new vehicles (EPI-N) (January 2002 = 100) increased from 99.4 in September to 101.0 in October, the highest level since the inception of the index in January 2002. In October, large trucks saw the largest increase in their index at 4.2%, followed by luxury SUVs at 2.8% and large cars at 1.3%.
Similar in purpose to the Consumer Price Index (CPI), the EPI-N measures the average changes in retail prices for new vehicles with fixed options over time in order to analyze trends. Edmunds.com also calculates and reports a wide range of data including transaction prices and net prices of vehicles by country of origin, manufacturer, make, model and vehicle segment.
About Edmunds.com, Inc.
Edmunds.com is the premier online resource for automotive information. Its comprehensive set of data, tools and services, including Edmunds.com True Market Value® pricing, is generated by Edmunds.com Information Solutions and is licensed to third parties. For example, the company supplies over 800,000 pages of content for the auto sections of AOL and NYTimes.com, provides weekly data to Automotive News and delivers monthly data reports to Wall Street analysts. Edmunds.com was named "best car research" site by Forbes ASAP, has been selected by consumers as the "most useful Web site" according to every J.D. Power and Associates New Autoshopper.com StudySM and was ranked first in the Survey of Car-Shopping Web Sites as reported by The Wall Street Journal. The company is headquartered in Santa Monica, Calif. and maintains a satellite office outside Detroit.