How much would you say a new car runs the average person? Would you be surprised to learn that it’s about $46,000 in the United States? When you’re paying prices like that, you want to make sure you’re getting quality (and won’t end up having to contact California lemon law attorneys because of repeated repairs), but you might also be wondering why the new car prices are so high to begin with. Today, we’re going to take a look at why cars are getting more expensive, and what you should know if you’re thinking about making a vehicle purchase.
The Average New Car Price Is What, Now?
It seems outlandish, but the average price of a new car (in the United States) hit $45,031 in September of 2021, crossing the $45,000 mark for the first time in history. This is up from $42,000 in June of 2021, and $40,000 at just the end of 2020. Why the sudden jump in prices in such a short period of time? According to Consumer Reports, it’s all because demand is up, and supply is drastically down thanks to COVID and its ever-rippling effects:
“Buying a car…has been difficult for months now, and new data shows that new cars, like used ones, are costing consumers more than ever. Blame it all on the pandemic and the resulting global semiconductor shortage that has hobbled automakers’ ability to crank out new cars, crimping supply, pushing up prices, and limiting availability.”
In truth, though, this is a situation that has been years in the making. Consumer preferences, for instance, have gravitated away from the sensible and affordable economy cars that dominated prior decades and toward larger, more expensive trucks and SUVs. This, compounded with the fact that even traditionally affordable brands like Hyundai and Honda are feeling the supply squeeze, and you can see why prices might start to creep up.
There’s even more to it than pandemic woes and supply deficits, however. Knowing that average prices have been creeping up, it may surprise you to learn that the actual sales dropped between August and September. With those entry level vehicles having their prices increased as well, the typical buyers of such vehicles have balked at making any sort of purchases, leaving those premium-tier automobiles to compose most of the sales numbers.
This is combined with what is seen by many as a lack of incentives from automakers to consumers means that those hopeful car buyers are left wanting for traditional deals that would have made buying a car cheaper. Gone are the cash-back deals and other offers that you’d typically see with an auto purchase—and this is because automakers (and sellers) don’t really need to do this because the demand has been staying at levels that negate any need to entice potential customers with generosity. The result? These factors all come together to create record highs when it comes to car prices, with little idea when those prices will drop again.