New Car Prices Surge, Sparking Buyer Concerns

Dana Eble and Tyler Marcus have shared a 2019 Chevrolet Trax for years. They are now searching for a second car but worry about affordability.

Price trends and recent data

Consumer prices rose 3.3 percent in March, the Labor Department reported. New car prices climbed 12.6 percent from a year earlier.

The average new vehicle now sells for nearly $50,000. That figure is about 30 percent higher than six years ago.

Average monthly payments—based on 10 percent down and a six-year loan—recently hit $775. The share of vehicles listed under $30,000 stands near 13 percent. Five years ago, that share was roughly 40 percent, according to CarGurus.

Used market and financing shifts

The used market shows fewer low-cost options. Vehicles priced under $30,000 fell from 78 percent in 2021 to 69 percent in February.

The average used vehicle sold for about $25,000 in February. Average used monthly payments rose to about $560.

Buyers are taking longer loans to cope. Seven-year loans account for more than 12 percent of sales, up from nearly 8 percent a year earlier, J.D. Power reports.

Factors driving higher costs

Automakers have moved away from small sedans toward larger SUVs and pickup trucks. Those vehicles deliver higher profits and push up average selling prices.

Domestic brands have seen larger price gains than many Asian manufacturers. Honda, Hyundai, Mazda and Subaru have trended lower in average selling prices.

Manufacturers increasingly bundle popular features into expensive trims. That strategy nudges buyers into pricier models, CarGurus notes.

Technology, regulations and supply shocks

Advanced safety systems add cost. Some features are required by federal rules, such as rear-view cameras.

The pandemic reduced production and tightened supply chains. Tariffs and other disruptions also pushed prices up.

Meanwhile, rising insurance and repair bills raise total ownership costs. Insurance is about 55 percent higher than six years ago. Average repair costs are roughly 48 percent higher.

How consumers are reacting

Many owners now keep cars longer. Average vehicle tenure is nearly 13 years, about 18 months longer than a decade ago.

Fewer new buyers earn under $100,000. That share fell to 37 percent last year from 50 percent in 2020, Cox Automotive reports.

Consumers increasingly consider leases, though lease payments can be as much as $140 less than average finance commitments, J.D. Power estimates.

Automaker responses and electric vehicles

Some manufacturers acknowledge the affordability squeeze. Ford said in February it expects several models to cost under $40,000 by the decade’s end.

General Motors has pointed to Buick and Chevrolet models, including the Trax, as lower-priced options. New EVs still cost more up front. They can, however, cut long-term fuel and maintenance costs.

Used EV inventory should grow as short-term leases expire. Many of those early leases benefited from larger federal tax credits.

Buyer stories and advice

Sam Dykhuis, 27, of Chicago bought a 2021 Mazda CX-5 for slightly more than $20,000. She paid cash and says the purchase helped control costs.

Eble, 30, and Marcus, 31, are eyeing vehicles in the $20,000 to $30,000 range. They are considering a newer Trax, a Mazda or an electric model.

Experts urge buyers to weigh total ownership costs. Extended loans raise interest expenses. Leasing can lower monthly costs but limits ownership flexibility.

New Car Prices Surge, Sparking Buyer Concerns has pushed many shoppers toward different strategies. Some pay cash. Others extend loans or turn to the used market.

For continued coverage of this trend, Filmogaz.com will monitor prices, policy changes and market shifts.