Car buyers opt for pricier, fancier models, reports show

Easing credit lets buyers get bigger, fancier cars

Easier credit, more confidence in economy have consumers choosing larger vehicles with all the bells and whistles.

As the auto industry prepares to report expected strong May sales today, it’s seeing evidence that buyers are willing to pay more for new cars.

The average sticker price on new cars buyers selected over the Memorial Day weekend was $36,213, up 5.6% from the same weekend last year, according to CNW Research.

Car research site Edmunds.com reports that in April, the average price shoppers actually paid was $30,320, up 2.1% from a year ago. Brands with the biggest gains included Chevrolet at 5%, Porsche at 4.9% and Infiniti at 4.7%. Driving higher purchase prices: -Looser credit. The average credit score for car buyers in the first quarter fell six points to 760, about the same as in the period in 2008 before the credit crunch, Experian Automotive reports. Many buyers can “finance more car than they expected,” says Ivan Drury, an analyst for Edmunds.com.

-Frills. Recession buyers often bought because they had to, and took stripped-down models.

Now, buyers are more confident and are demanding goodies. “They love all the features,” says Mike Jackson, CEO of AutoNation, the largest U.S. dealer chain. And, “they are willing to pay more for fuel-efficient technology.” That technology, such as direct-injection engines and turbocharging, is driving up car prices, though it should bring long-term savings on gas.

-Tr-cks are back. With gas prices more sta- ble, demand is up for pickups and SUVs, which typically cost more, Drury says. “People have become so accustomed to high gas prices, they aren’t scared of an SUV anymore.”

Also, the truck discounting that was widespread in the recession and as gas prices rose, has been cut back.

-Less supply. Industry sales could be 14.4 million this year, IHS Automotive reports, up from 12.7 million last year and the recent low of 10.4 million in 2009, according to Autodata.

With industry cutbacks in the recession, there are fewer factories, and production is more in line with demand, leaving less need for discounting to push sales.

Still, there are some incentives — an average $2,135 per vehicle in May, up 0.6% from a year ago, says Edmunds.com. But much discounting is to clear 2012 models being redone for 2013.