WASHINGTON ( TheStreet) -- If an automaker's big strategy is to raise prices and sales drop off immediately as a result, chances are the car-buying public thinks some of those vehicles are way overpriced.U.S. car sales fell 3.7% in May to 1.06 million, which puts automakers well off the 13 million sales pace initially predicted for the year. That's due in no small part to the $29,817 average transaction price car data firm TrueCar posted for May. That's the highest average selling price for automobiles since 2002 -- just the latest aftershock of earthquakes in Japan that resulted in tsunamis that killed tens of thousands of people, created a nuclear crisis and crippled the country's energy supply. "Even though consumers continued to move toward smaller vehicles, they also chose
Starting price: $35,605
Since the Japanese earthquake and tsunami in March, Edmunds says the average price of the midsize TL sedan has risen $2,347, or 6.5%. Honda stands by its second-best-selling luxury car, but the consumers aren't buying it. Seriously, with sales dropping off nearly 19% from May 2010 and TL sales off 6.8% year to date, consumers just aren't buying the TL with the same passion they did pre-tsunami. That's just fine by Hyundai, whose competing Genesis started out at $1,400 less than the TL and whose sales were up nearly 12% in May and 19% for the first five months of this year. Now, we're aware that Honda's luxury brand would never deign to compare itself to lowly Hyundai, so let's go with the car that the TL's site says is its direct competitor: The BMW 5 series. Not only did the $45,000 5 series' 4,200 May sales nearly double the 2,197 sales that month for the TL, but the 5 series' sales were up 83% from last may and more than 74% year to date.
Starting price: $15,805
The Honda Civic may not be the priciest car on the lot, but Edmunds says it's $1,496, or 8.2%, more expensive than it was before disaster struck Japan. That price hike and the ensuing 30% loss in business really couldn't have come at a worse time for Honda. Ford's competing $18,200 Focus saw sales increase a similar 30% last month, with total sales eclipsing the Civic 22,000 to 18,000. Meanwhile, GM's new $16,525 Chevrolet Cruze took the top spot among compacts for the second straight month, with 22,700 vehicles sold. Sadly, the newly priced Civic doesn't even get a bronze medal for May; Hyundai's reintoduced Elantra came in cheaper than the Civic at $15,195 and more than doubled its sales from May 2010, to 20,000.
Starting price: $33,295
This was just the start of a brutal beating for Toyota's luxury division. Not only did the IS250's price jump $1,380 (3.8%) since March, leading to a 42.8% collapse in May sales, but it helped power a 21.2% Lexus decline for the month. It's a luxury brand that still hasn't recovered from last year's recalls and has watched sales slide 1.7% so far this year, and Toyota is powerless to do anything about it. The automaker slashed average incentives to $877 in May, well below the industry's $2,017 average and under the $1,186 offered by Hyundai. Meanwhile, as the Lexus IS250 still believes it's competing against a Mercedes-Benz C-Class that sold 5,000 units last month and more than doubled the IS' 1,712 May sales, the Lexus' market share is also being reduced by lower-priced, similarly semi-luxe vehicles such as the Buick LaCrosse ($27,000 and 4,774 sales) and Regal ($26,000 and 4,200 sales). Oh, and Hyundai would like to remind Lexus that the similarly priced Genesis outsold the IS250 by more than 1,000 vehicles last month.
Starting price: $21,380
This is not the car you want to play pricing games with. Along with the Toyota Camry, the Accord is supposed to be the broad-appeal, fairly priced, benign midsize that anchors the entire brand. That Honda allowed the price to jump $1,032, or 4.4%, since March should give some idea of just how dire Honda's situation has become. Hyundai's $19,395 Sonata has been waiting for this moment for some time. It saw May sales increase 7.5% as the Accord's slid 34.5%. It's been an overall bad year for the Accord, though, as year-to-date sales have slumped 10.5% over 2010. If the Sonata's pulling punches, where are those losses coming from? The $19,850 Ford Fusion could be doing the damage, as it accelerated past the Accord's 18,000 sales last month with nearly 25,000 of its own. That's a 10% boost from May 2009 and has fueled a 19.5% sales jump for this year so far. The biggest beast on the block, however, has been the $21,975 Chevy Malibu. Its 25,600 sales in May are up 17.9% from May 2009, while year-to-year sales are up 13%.
Starting price: $36,725
We've already discussed how a luxury car price hike can open the door for more budget-conscious competitors such as Hyundai or Buick, but let's look at how it can awaken sleeping, market-share-starved giants as well. Toyota only boosted the Lexus ES350's price by $874 (2.3%) since March, but that was enough to drop sales 49% in May and 22.6% on the year. Audi aired Super Bowl ads and blitzed the market in a blatant attempt at stealing Lexus' dwindling luxury share, and it's now getting Super Sunday buffet-style bloated from eating Lexus' lunch all year. The Audi A4 was already outpricing the ES350 at little more than $31,000, but its 3,200 sales in May are now well ahead of the ES's 2,400. The road's looking a lot clearer for the A4 as 2011 rolls on, as a meager 0.2% sales increase in May is just part of a 2.4% increase for 2011 thus far. From Audi's perspective, Lexus didn't just add $900 to the ES' price: It added about 900 miles of distance between the ES and the A4's rearview. -- Written by Jason Notte in Boston. >To contact the writer of this article, click here: Jason Notte. >To follow the writer on Twitter, go to http://twitter.com/notteham. >To submit a news tip, send an email to: email@example.com.
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