SUV market share sets record but prices remain constrained

SUV market share has hit an all-time high once again, but customers and automakers alike are still feeling the burn of the market’s affordability crisis.

Driving the news: With manufacturers showing off the latest in vehicle tech, the ongoing LA Auto Show highlights how expensive cars are becoming for the average consumer. But despite the market’s barriers to entry, Edmunds data reveals that buyers are continuing to purchase bigger models while ditching smaller vehicles.

• SUVs accounted for 58% of auto transactions between Jan. and Oct. of this year, a record-breaking share. Over the same period, the share of cars has fallen to a record low of 19%.

• Meanwhile, SUVs continue to see greater demand despite their demanding prices. The average cost of an SUV has risen roughly 44% to $46,211 over the last two decades, a difference of more than $14,000.

Zooming in: The shift to SUVs makes sense considering their practical utility, especially for growing families who often purchase them out of necessity. But despite their popularity, affordability is forcing automakers to be more conservative with their pricing when it comes to these vehicles.

• The 44% 20-year price increase seen by SUVs is actually the lowest when compared to other types of models. Cars saw a 54% jump over the same time frame, while trucks and vans surged 106% and 95% respectively.

• This signals that manufacturers are holding back SUV prices to accommodate consumer preferences, keeping models more affordable than others despite their bigger size.

• Jessica Caldwell, Edmunds’ Head of Insights, notes this balance is a difficult and time-consuming one to strike.

Bottom line: Unsurprisingly, the buyers of today need big vehicles at small prices. But meeting those needs is a challenge for manufacturers and dealers, especially in the midst of the auto market’s uncertain post-pandemic landscape.

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