Sticker shock: Average new car prices hit a record $41,000 in July

J.D. Power says low inventories are driving the increase

The number of new cars being sold is from record levels, but the prices being paid for them are the highest ever.

According to the J.D. Power and LMC Automotive Forecast, the average transaction price for a new vehicle is projected to be $41,044 during the month of July, a 17% increase over last year.

High demand is meeting low inventories caused by the ongoing semiconductor shortage hampering production across the industry, which has led to a drop in incentives and more cars selling for list price or even more.

"Eight percent consumers are paying near or above MSRP, which is driving up dealer profitability over 200% compared to 2019. But with inventory expected to remain right through summer, consumers’ choices are to pay or wait," J.D. Power Vice President of Data & Analytics Tyson Jominy told Fox News Autos.

Cars are turning off dealer lots more than twice as quickly as they were in 2019, before the coronavirus pandemic began to cause issues for the industry and used car prices have seen a similar jump.

HOW SOON WILL USED CAR PRICES DROP?

CLICK HERE TO GET THE FOX NEWS APP

One bright spot for car owners is that trade-in values are also on the rise, hitting an average of $7,501 in July, up from $3,353 a year ago. This, combined with low interest rates, means the average monthly finance payment has only increased 6.4%, or $38.