Inflation under President Joe Biden has soared, driving up the cost of everything. But car prices have gone right through the roof.
Just 8% of new cars on the market right now cost less than $30,000. That’s down 38% from before the COVID pandemic began in 2020.
Carmakers are finding heavy demand for high-end SUVs and trucks, so they’ve trimmed down their selection on more affordable models, according to data from the car shopping app CoPilot, cited by CNBC.
“It’s the least affordable car market in modern history,” said CoPilot’s CEO Pat Ryan.
In 2017, the average cost of a new vehicle was around $35,000. Today, it’s nearly $50,000, according to CNBC. And now, 10% of all vehicles sold cost more than $70,000, a 7% jump from five years ago.
Low-end vehicles have also plummeted. Just 0.3% of new vehicles sold now cost less than $20,000, compared with 8% five years ago, Edmunds found.
The high cost of new automobiles has pushed buyers to purchase older cars with more mileage, which means their cost of maintenance will rise. “Those that have the least ability to pay are getting the car that’s going to cost the most to own,” Ryan said.
So, of course, the cost of buying a used car has also soared. A new Edmunds report found prices on average for used cars are 44% higher than five years ago, but there is some relief: they’ve dropped 6.4% in the first quarter of 2023, Fox News reported.
“The good news is that used prices have softened enough in Q1 to offer some relief for consumers getting pushed out of the new market,” Edmunds Director of Insights Ivan Drury told Fox. “The not-so-good news is that the used vehicle market continues to be challenging for car shoppers since there are fewer vehicles available and demand is keeping prices historically high.”
“Right now the market’s kind of like an EKG, hot, cold, hot, cold. It’s hard to sell right now with the interest rates,” Mike Stotler told The Daily Wire. Stotler, who lives in Virginia, has bought and sold used cars for a dealership for 35 years.
“The bread and butter price point right now is $12,000 to $20,000, but they’re hard to get,” he said.
Interest rates are also hammering buyers of both new and used vehicles. The average annual percentage rate (APR) on new vehicles bought in the first quarter of 2023 jumped to 7%, compared to 4.4% a year before, according to Edmunds — the highest level since the first quarter of 2008.
Used cars were worse: the average APR increased to 11.1% from 7.8% a year ago, Edmunds said.
“Consumers paid an average monthly payment of $730 for new vehicles in the first quarter of 2023, compared to $656 a year ago, according to Edmunds. For used cars, consumers paid an average monthly payment of $551, a slight increase from the $542 they paid last year,” Fox reported.
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