Some car brands naturally command a higher price on the showroom floor: think BMW. (BMWYY) Mercedes Benz (DDAIF) volkswagen (VLKAF) owned by Audi (AUDVF) and its Porsche brand which will soon be made public, etc.
And then there are brands that naturally evoke something more “value” sensitive – brands like Honda (HMC) hyundai (HYMLF) and Toyota (MT) and Kia (KIMTF) .
What’s surprising to many is that the latter brand – Kia – has actually moved into the highest-margin category. In fact, Kia brands ranging from the premium seven- and eight-seat Telluride SUV to the entry-level Rio are now among the vehicles with the highest average markup percentages.
On average, Kia cars and SUVs sell for about 6% more than their list price, CNN Business Reports, citing data from Edmunds.com. Honda, Hyundai and luxury SUV brand Land Rover, according to CNN Business, are roughly tied for second, at 4% above list price on average.
In dollar terms, Land Rover still holds the highest profit margins, with customers paying an average of $3,686 more than list price, CNN Business reported, citing Edmunds. However, the average purchase price of a Land Rover SUV in the United States is over $94,000, making the markup percentage actually lower than Kia’s.
Value for money + technology = demand
Even on a dollar amount basis, Kia still ranks second among all car brands in the United States, with customers paying an average of $2,183 more than list price, according to CNN Business. That’s especially telling given Kia’s average purchase price of around $36,000, which makes the percentage markup much higher.
CNN Business cites value for money as a key reason for Kia’s now higher margins, which in turn have been fueled by both a tight auto market and improving perceptions that Kia is not is not necessarily a brand to buy because of the low price.
On the contrary, South Korea-based Kia markets its range of cars and SUVs as sportier and more technological than many of its competitors, which has been helped by the popularity of the company’s electric vehicle offerings.
Even before chip shortages and supply chain issues began to affect vehicle production, some Kia models like the Telluride were already commanding a premium over their list price. The Telluride and new Kia Carnival minivan are selling for about 7% above list price on average, CNN Business said.
Granted, Kia’s premium order may not last. Many other automakers are gearing up to roll out new EVs that consumers are either yearning for or have already started shipping.
Hard-to-get EVs also command bounties
General Motors (GM) earlier this month launched its second attempt at being a mass-market leader in electric vehicles with the launch of the Chevrolet Equinox EVwhich is expected to retail for $30,000.
Volkswagen, BMW, Mercedes-Benz and new EV makers including Rivian (SHORE), Fisher (FSR), Nio (NIO), Xpeng (XPEV) and others are also working on launching battery-powered vehicles – all at very different price points, but also models that are expected to be in high demand and demand a premium.
Ford (F) stopped taking reservations for its all-electric F-150 Lightning when its backlog reached 200,000 at the end of 2021. Deliveries of the electric pickup began in May and the company is working to increase production, but as of late August only 6,800 vehicles had been delivered.
GM, meanwhile, has more than 90,000 reservations for the all-electric Hummer — so many that it had to put a pause on adding buyers to the waiting list last week, which of course made even more popular vehicles on the resale market.
A white Hummer EV Pickup Edition with 100 miles on the odometer and a window sticker price of $114,290 is currently being offered on aftermarket car sales website Cars & Bids for $150,000.