Executive at Toyota Predicts That New-Car Costs Will Top $50,000 in 2023

According to Automotive News, a Toyota official predicts that by 2023, the average price of a new automobile would be more than $50,000.

In 2023, supply chain problems caused by a pandemic will still be a problem, according to Toyota North America’s head of sales, Jack Hollis.

Hollis said Toyota is “eating it in our own profitability” because to rising raw material costs that are partially being passed on to customers.

According to J.D. Power, average new automobile costs hit a record high in February, rising 4.8% year-over-year to $46,229. While it may appear that the recent upward trend is unsustainable and that the bubble must eventually burst, a Toyota official predicts that the market average will continue to rise. According to Automotive News, Jack Hollis, the president of sales for Toyota’s North American division, predicts that the average transaction price would exceed $50,000 by 2023.

Even if Hollis thinks a recession has begun, the market is not behaving as one would expect it to enter a downturn, as evidenced by the extraordinarily high demand for new automobiles. We will sell every car we produce,” Hollis declared. As we are still not back to normal worldwide, “the only thing holding us back is the whole of the supply chain and the fragility of it.”

If supply constraints could be alleviated, Hollis estimates that the U.S. auto market might see roughly 17 million sales in 2023. With 15 million units expected to sell, “another 2 million vehicles added to pent-up demand.” Because of this, the demand for pre-owned automobiles will remain high, reducing the rate of depreciation and maintaining high residual values.

According to Bob Young, Toyota’s vice president of buying and supplier development, greater raw material costs have been the primary cause of the price increases. Although Young claims that things are looking well, he adds that consumers probably won’t notice a drop in material costs until 2024.

According to Hollis, Toyota and Lexus, which together sold 2.1 million vehicles in the United States in 2022, may increase sales by another 100,000 units, but at the expense of the company’s market share. It’s possible that car companies will have to eat the cost of the increased cost of materials. Hollis added, “We’re eating it in our own profitability,” despite the fact that the company is attempting to determine how much it can pass on to customers.

As in 2022, the company anticipates ending 2023 with only about 30,000 automobiles in inventory at dealerships.

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Caleb Miller started writing automotive blogs when he was 13 years old, and after graduating from Carnegie Mellon University, he finally got to work for the vehicle magazine of his dreams, Car and Driver. He is a huge admirer of motorsports and dreams of owning a Nissan S-Cargo or any similarly out-there vehicle.