Automakers say they're mindful of price to keep customers in fold

Though vehicle prices command a larger share of household income than in the past, automakers call their pricing accessible and representative of consumer demand for more expensive models.

A spokesperson for the Alliance for Automotive Innovation, an automaker trade association, said customers are buying light trucks "at nearly the highest pace ever," which is contributing to the rise in transaction prices. Several automaker executives told Automotive News they're paying close attention to price.

Scott Keogh, CEO of Volkswagen Group of America, called affordability "a strategic asset of Volkswagen, and it's one we don't want to walk away from."

Affordability challenges in part reflect automakers prioritizing production of the most profitable and best-equipped vehicles during a time of low inventory, Keogh said.

"But I believe strongly, as Volkswagen, in the People's Car, so it's important that we price and have available cars in the low $20,000s," said Keogh, pointing out that Volkswagen's Jetta and Taos both have starting prices in that zone.

Nissan Americas Chairperson Jeremie Papin said the brand strives to offer competitive prices. "We are very attentive to ability to pay, willingness to pay, because the idea is to expand the customer base in all the segments where we compete," he said.

But Papin said brand leaders still want consumers to pay sticker price. "We believe that's the right level of value, and therefore our intent is to maintain that value proposal going forward," he said.

General Motors North America President Steve Carlisle said the automaker "every week, every month" monitors pricing with the aim to keep consumers from being pushed out of the new-vehicle market.

"Right now, it's a very good market from a pricing perspective because of constraints," Carlisle said. "As the volume availability starts to expand, we'll have to make pricing decisions that go with that, but I'd say maintain that discipline. I would hope we don't get back into a situation where the industry is overproducing and we get back onto the other end of the spectrum because that's not right, either."

Lower vehicle values could hurt consumers, too, Carlisle said.

"Having a car with high residual values is great if you're a consumer," he said. "If you can find yourself where you don't have a car with great residual values, that's not awesome. It's all about working every day to find that balance."

Automakers also are looking at their own rising costs and the actual transaction prices being collected by dealerships in their networks.

It means that manufacturers are likely to introduce notably higher sticker prices for 2023 model-year vehicles, said Tyson Jominy, vice president of data and analytics for J.D. Power.

"That's how automakers respond to inflation," Jominy said.

At the same time, automakers are looking beyond the next model year.

Keogh argued that affordability is particularly important as the industry shifts to electric vehicles, which typically carry higher prices. Even in a world migrating to EVs, Americans need the option of new vehicles priced below $25,000, he said.

"We don't want to and we won't walk away from that segment because I'm starting to see data where people are abandoning the market, which is leading to an aging fleet," Keogh said. "We think it's an opportunity for us, and we don't want to lose sight of it."

Hannah Lutz and Urvaksh Karkaria contributed to this report.