If you think you are seeing more expensive cars on the road these days, the numbers actually say you are right.
JD Power shared its latest data on new car sales market with Yahoo Finance, and there were some surprising details. (The data is preliminary for Q1 2022 as there were still a few days left in March, and JD Power had to forecast through the end of the month.)
Tyson Jominy, vice president of data and analytics at JD Power, drilled down to discuss what’s happening in the exploding premium market.
“When we go back to Q1 of 2020, right before the pandemic, sales of vehicles under $ 20,000 were outselling sales of $ 100,000 cars 20 to 1,” Jominy told Yahoo Finance. “Well, this quarter, it’s inverted, and sales of $ 100,000 cars are now outselling the low-end cars 3 to 1. So it’s been a complete inversion.”
In the first quarter of 2022, sales of premium cars that cost more than $ 80,000 and $ 100,000 jumped 44.0% and 34.8%, respectively, from a year ago. Those are huge moves, but both figures actually dropped slightly from the prior quarter.
Jominy surmises this was not because of lack of demand, but because there was not enough supply. So it’s possible the rise in premium car sales would have been even higher had automakers been able to meet demand, he said.
‘We do not see it slowing down’
Given that high demand for luxury cars is likely unmet as of yet, JD Power sees the luxury buying frenzy continuing for quite some time.
“We do not see it slowing down any time, really through the end of ’23,” Jominy said of the research firm’s forecast. “So we’re talking about another 18 months or so of these kind of persisting conditions. We will continue to see these higher-end vehicles doing well.”
One big factor driving these sales – the wealth effect. During the pandemic, high-income earners and the wealthy saw their fortunes surge over the past two years, while only recently have wages for lower income individuals started to rise.
“The recovery has been very beneficial to high-end consumers,” Jominy said. “Without exotic vacations to go on … consumers are spending on a lot of durable goods. They’re buying a lot of handbags, they’re buying a lot of timepieces and sneakers. And of course, they’re buying luxury cars as well. “
Case in point – even the highest end of the auto market is booming. Lamborghini, McLaren and Bentley are coming off their best sales year ever in 2021. For 2022, many of them are even expecting bigger gains to come – assuming they can navigate supply chain shortages and other disruptions.
Pras Subramanian is the senior autos reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.
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