Dealers added an average of $728 to the MSRP of each new car in 2021

The bottom line is the bottom line, so the Cadillac Escalade is the hottest new vehicle in the US market. According to research by Edmunds, the average transaction price (ATP) for Caddy’s large, large SUV is an astonishing $106,226, which is $3169 above the manufacturer’s average suggested retail price of $103,057. And for the longer-wheelbase Escalade ESV, that ATP number jumps to a mind-boggling $120,340 at an MSRP of $103,143. That’s $17,197 more than the sticker – and every cent of that is pure dealer surcharge.

“People want Escalade,” said Ivan Drury, senior manager of Insights at the market monitor Edmunds, which is owned by CarMax. “Buyers absolutely love Escalade. They can’t get enough of the redesign.”

That mania for the fifth-generation Escalade has put the brand at the top of Edmunds’ list for vehicle transactions above the MSRP. According to that list, Cadillacs had an average MSRP of $76,914 and an ATP of $80,962 in 2021. That’s an average of $4,048 above suggested retail — roughly an increase of about five percent. Since this figure is sales weighted, most of that fat number comes directly from Escalade’s sales.

Cadillac sold a total of 40,504 Escalades in the United States in 2021, plus another 3,444 in Canada and a few more in the rest of the world. That’s more than 2020 sales of 24,545 units in the US and 1,755 to the Canucks. Those numbers have been skewed by pandemic challenges and strange variations in production, but they represent the best-ever year of sales for the Escalade. And the hunger for the oversized beast hasn’t abated in 2022.

It’s also ironic that demand for the V-8-powered Escalade is so high just before Cadillac begins production of its battery-electric Lyriq in March. Cadillac’s other current offerings don’t have the same marketing bang as the Escalade, but there are signs dealers are asking for hefty extra markings for the CT4-V and CT5-V Blackwing sedans. But those are limited production models that won’t move the statistical needle like the Escalade.

What Edmunds’ research further indicates is continued strong demand for large, luxury SUVs and the effect of new models on pricing. One slot behind Cadillac, Land Rover finishes with an average MSRP of $87,457 and an ATP of $90,022. That’s an average premium of $2565, or about three percent.

What’s even more surprising is the third-place brand: Kia. The Korean automaker has a sales superstar in the Telluride large SUV, but it also gets strong prices across its range. For example, the new K5 midsize sedan (which replaced the Optima last year) has an ATP of $31,790 at an average MSRP of $29,533. “That’s not some blip phenomenon,” Drury says. “The dealers only keep them on the lot for about 13 days.”

With that in mind, Kia only sells about 5,700 K5s a month. Some of it may be limited. But Toyota sells about four times as many Camry’s each month, and that sedan goes for an ATP of $31,685 at an average MSRP of $31,025. A price of $660 for a car entering its fifth year of production is impressive.

The new K5 is a visually striking car, has a long 10-year warranty and is dynamically significantly better than the Optima ever was. But will it age as gracefully as the Camry has on the market? That makes the car industry one of the better spectator sports. But that the Kia is already being sold at a premium over the Camry is impressive.

R&T

Still, there are brands that sell their wares at a discount. Mini, BMW, Ram, Lincoln, Volvo and Alfa Romeo are all in the basement on Edmunds’ list. The average Alfa has a transaction price of $51,223 and an average MSRP of $54,644, a $3421 discount for pigs. In fact, Alfa’s average six percent discount is greater than Cadillac’s average five percent premium.

In total, according to the survey, the average new vehicle has a MSRP of $44,989 and an ATP of $45,717. That’s about a two percent premium and an average of $728 that dealers add to every sale in pure profit. Dealers, rumor has it, just like money.

As the auto market returns to normal, these trends are likely to change. And consumers again expect small discounts for most vehicles. But when that shift will happen remains open to speculation. The current cuckoo-crazy second-hand market is likely to remain crazy until the new-vehicle market achieves some stability.

It was a wild sales ride. And it will remain that way for a while.

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