- A Toyota executive believes average new car prices will surpass the $50,000 mark by 2023, according to a report from Automotive news.
- Jack Hollis, sales manager for Toyota North America, that demand will continue to outpace the company’s ability to build new vehicles as pandemic-induced supply chain issues continue into 2023.
- Higher costs for ram materials are also a contributing factor, and while some of those costs are being passed on to consumers, Hollis said Toyota is “eating into our own profitability.”
In February, average new car prices hit a new high, rising 4.8 percent from a year ago to $46,229, according to JD Power. The steady increases of the past few years may seem unsustainable, as if the bubble is bound to burst soon, but one Toyota executive believes the average will only continue to rise. Jack Hollis, head of sales for Toyota’s US division, said he believes the average transaction price will reach $50,000 by 2023, he reported. Automotive news.
While Hollis believes an economic downturn is already happening, it doesn’t fit the usual expectations of how the market should behave in a recession, with demand for new cars still very high. “We’re going to sell every vehicle we can make,” Hollis explained. “The only thing holding us back is the entirety of the supply chain and the fragility of it, because we have not returned to normal anywhere in the world.”
Hollis believes the U.S. auto market could reach nearly 17 million sales by 2023, if not for supply issues. The 15 million sales expected for this year leave “another 2 million vehicles added to the accumulated demand.” This will result in continued strong demand in the used car market, reducing depreciation and keeping residual values high.
The price increase has been primarily the result of higher raw material costs, according to Bob Young, Toyota’s vice president of supplier development for purchasing. While Young says improvements are starting to occur in this area, consumers likely won’t see material prices drop until 2024.
Hollis predicts that Toyota and Lexus, which combined for 2.1 million units in the US in 2022, could add another 100,000 sales, but the company’s market share could suffer. Automakers would also have to absorb higher material prices. Hollis acknowledged they’re trying to figure out how much they can pass on to consumers, but said, “We’re eating into our own profitability.”
The company expects to finish 2023 the same way it finished 2022, with only about 30,000 vehicles in inventory on dealer lots due to high demand.
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Associate News Editor
Caleb Miller started blogging about cars at age 13 and realized his dream of writing for a car magazine after graduating from Carnegie Mellon University and joining the Car and driver team He loves quirky and obscure cars, aiming to own something outlandish like a Nissan S-Cargo, and is an avid motorsports fan.
