The cost of a very popular fragrance is getting mighty expensive.
We're not talking about JAR Bolt of Lightning, which goes for $765 per ounce, or Joy by Jean Patou, which costs $850 per ounce, or even Caron Poivre, which will you set back one thousands bucks for just one ounce of the stuff.
No, the fragrance we're talking about is the beloved new car smell.
Industry analysts say that the numbers keep heading north to a point where buying a new set of wheels is considered a luxury purchase.
“It is no longer a $25,000, $30,000 transaction. It is a $50,000, $60,000 transaction,” Patrick Roosenberg, director of automotive finance intelligence at J.D. Power, an automotive data and analytics company, told The Hill on April 5. “It is a greater financial commitment than it has ever been.”
Between December 2017 and December 2022, the share of all new auto sales priced above $60,000 more than tripled, from 8% to 25%, according to research by Cox Automotive.
Steering the Market Toward Luxury
In the same five years, the share of sales under $25,000, a standard cutoff for economy vehicles, shrank from 13% to 4%.
“The manufacturers have been steering the market toward more expensive products,” said Charlie Chesbrough, senior economist at Cox. “All those bells and whistles, nav-screens, cruise control, all those fantastic and lifesaving technologies cost money.”
Indeed, Cox said that for many current car shoppers, “new-vehicle prices are about as enjoyable as a sharp stick in the eye.”
"Five years ago, the idea of a $110,995 Jeep might have been absurd," the Cox study said. "But in our current automotive market, that price point is becoming more routine and pushing industry ATPs (Average Transaction Prices) higher and higher."
A report released in February by J.P. Morgan (JPM) Research found that car prices rose dramatically in 2022 as a result of global supply chain issues, with a persistent chip shortage holding up production in the auto industry.
“We estimate that half of the increase in new vehicle prices relates to the passing along of higher input costs,” Ryan Brinkman, Lead Automotive Equity Research Analyst at J.P. Morgan, said. “There’s still a lot of inflation bubbling up in the new vehicle supply chain."
Automakers Hit With Plenty of Costs
"Even though raw material costs are falling, suppliers have a lot of other higher non-commodity costs — diesel, freight, shipping, logistics, labor, electricity — to pass on to automakers," Brinkman added.
The shortage of new cars has fueled demand—and boosted prices for used cars, the report said, with Brinkman noting that “used vehicle prices and new vehicle prices exist in a sort of feedback loop.”
There is some good news on the horizon.
Brinkman said he currently estimates the average transaction price of a new vehicle in the U.S. to decline by around 2.5% to 5% year-over-year in 2023, “supported by increasing inventory availability as supply constraints ease and as automakers produce more lower-end models equipped with fewer high-end features.”
“This represents a more normal mix relative to the past several years, when the preference was for the production of high-end models,” he said.
And if you're really craving that new car smell, but you don't have the money, there's always Demeter's New Car, which the company describes as "a light and wearable fragrance experience, reminiscent of the first time you sat in that new car you love so much."
A one-ounce Pick-Me Up Cologne Spray sells for $21.60.
