USA: Average price of new vehicles tops $47K; payments cross record $700/month

[shinobi602]

Getting insane honestly. How in the world is the average American affording a vehicle now? Double shifts? Three jobs?

Cars have long had their own special place in America. The wide open roads, the wind in your hair, the feeling of freedom when you drive. Cars have been celebrated in movies and eternalized in songs for evoking all that.

And right now, that feeling of freedom comes with a pretty hefty price tag. The average monthly car payment crossed $700 a month earlier this year, the highest on record, according to Cox Automotive/Moody's Analytics.

"I joke with people that every new car purchase is a luxury car purchase, I don't care what you're buying," says Ivan Drury, senior manager of insights at the car buying expert Edmunds. However, cars aren't just a symbol of freedom. In fact, they play an essential role in the economy. People rely on cars to get to work — 3 out of 4 Americans commute to work by car. Then there's school drop-offs, doctors appointments, grocery shopping and more.

And yet, for more and more Americans owning a car is becoming unaffordable.

"Unfortunately for the segment of the population that probably needs it the most, it's getting more and more out of reach," Drury notes.

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The primary reason cars have gotten so pricey can be traced back to the computer chip shortage that started during the pandemic. When car sales dropped dramatically during the early parts of the lockdown, auto manufacturers slashed orders for the chips. Around the same time, as schools and work went online, people bought additional laptops, iPads, TVs, video games and other electronic goods for their home. So chip manufacturers shifted their production to serve those companies.

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This was soon followed by other big shifts in the economy. People started moving out of crowded cities into suburban locations, and suddenly demand for cars skyrocketed.

Auto manufacturers were caught flatfooted and unable to make enough cars because they didn't have enough microchips, which play a big role in today's cars, controlling everything from windows to the navigation screen to even passenger seat sensors.

With a limited supply of chips, automakers cut back and made fewer cars. They decided to put their chips into making bigger, more expensive vehicles — SUVs loaded with features — to get more bang for their buck. That also means that automakers have been making fewer compact cars and sedans, the more affordable vehicles.

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Those who have sought respite by buying used cars are also facing sticker shock. Used car prices have shot up even more dramatically than new car prices, up 16.1% from a year ago compared to a 12.6% jump in new car prices. Johnny Navarro experienced that sticker shock firsthand after a recent car accident. No one was hurt, but his car was totaled. When he went to the dealership, he found monthly payments had doubled for cars he'd looked at only a few years earlier.

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Monthly car payments have crossed a record $700. What that means

The average cost of a new car is also at the highest on record, topping $47,000 a pop. At this rate, an essential household purchase is starting to feel like a luxury in America.

www.npr.org

 

[TacomaSCDisaster]

The American dream of spending 2/3 of your income on rent and car payments

If you're lucky you can even occasionally afford food!

 

[pikachief]

About to pay off my used car in a couple months after 7 years at $300/month. Guess I'm gonna have to take real good care of it for as long as I can!

The American dream of spending 2/3 of your income on rent and car payments

If you're lucky you can even occasionally afford food!

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Growing up I was always taught 1/3rd of my paycheck should go towards bills only lol 😂

 

[WascallyWabbit]

I get there's a lot of issues with supply and stuff, but it boggles my mind how much demand there is for new cars

Like, I make good money but I've had my 2007 Acura for 8 years now and have no plans in the near future to upgrade, and even when I do it will almost certainly be used

But I guess Americans really just love new cars 🤷🏻‍♂️

 

[WereSalamander]

The American dream of spending 2/3 of your income on rent and car payments

If you're lucky you can even occasionally afford food!

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This clearly means corporations need an even bigger tax break!! /s

 

[Mammoth Jones]

New Camry starts at 25.8k. Ditch the Lexus.

 

[shinobi602]

I get there's a lot of issues with supply and stuff, but it boggles my mind how much demand there is for new cars

Like, I make good money but I've had my 2007 Acura for 8 years now and have no plans in the near future to upgrade, and even when I do it will almost certainly be used

But I guess Americans really just love new cars 🤷🏻‍♂️

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Unfortunately the used market isn't much better:

And used cars? Forget it. They're just as unaffordable

Those who have sought respite by buying used cars are also facing sticker shock. Used car prices have shot up even more dramatically than new car prices, up 16.1% from a year ago compared to a 12.6% jump in new car prices.

Johnny Navarro experienced that sticker shock firsthand after a recent car accident. No one was hurt, but his car was totaled. When he went to the dealership, he found monthly payments had doubled for cars he'd looked at only a few years earlier.

"To see it jump from like $300 to $600 for a Corolla or Civic was like, I should be driving like a Mustang for that much money, you know?" Navarro said incredulously.

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[WascallyWabbit]

Unfortunately the used market isn't much better:

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Yeah I saw that bit in the article, and it def sucks. But the stats for pricing going up from a year ago are a bit dramatic cuz used cars are vastly cheaper to start with compared to new sticker prices

So like I said, it's wild people want new cars so badly

 

[ruggiex]

It's unbelievable that I bought my brand new Mazda 3 in 2018 for 18k... I had thought about selling it because of switching to WFH but I can't buy anything even remotely close to the same thing at that price tag any more.

 

[Knight613]

47k average cost makes it sound like the majority of people are buying SUVs, which they probably are cause it's America.

 

[Stath]

I bought my used car for about 10k several years back and am very grateful to not have to worry about buying or leasing one in this climate. If it becomes unusable I doubt I would be able to afford another one anytime soon, though.

 

[shinobi602]

Yeah I saw that bit in the article, and it def sucks. But the stats for pricing going up from a year ago are a bit dramatic cuz used cars are vastly cheaper to start with compared to new sticker prices

So like I said, it's wild people want new cars so badly

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They're probably still at super high price ranges for the average person. I bought my car new back in 2016 for about $28K and put around 35K miles on it so far. The same used car with similar mileage is going for $32-33K+ now. It's ridiculous lol.

 

[Corran Horn]

I get there's a lot of issues with supply and stuff, but it boggles my mind how much demand there is for new cars

Like, I make good money but I've had my 2007 Acura for 8 years now and have no plans in the near future to upgrade, and even when I do it will almost certainly be used

But I guess Americans really just love new cars 🤷🏻‍♂️

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I been looking at fully electric cars for last 1-2 years and man the used market sometimes is more than a new car... It's crazy right now.

 

[metalslimer]

Another way the overeliance on cars and lack of public transportation will end up fucking us

 

[bruhaha]

Average is a poor metric, I wonder what the median is compared to median incomes.

 

[WascallyWabbit]

They're probably still at super high price ranges for the average person. I bought my car new back in 2016 for about $28K and put around 35K miles on it so far. The same used car with similar mileage is going for $32-33K+ now. It's ridiculous lol.

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Yeah for sure, I'm not discounting how much it sucks for those needing it
But I can't help but think if the new car market wasn't so nuts the used car market would be more chill. It seems very clear to me that not everyone buying cars is actually in need of it

 

[wenis]

Lol yeah never getting a car or a license. Golly gee

 

[TylerD]

I'd never ever buy a new premium car. New prices and used prices are really wild though. I could probably sell my 2017 X3 I bought in April 2021 for $27K USD with ~ 29,000 miles for $34-35K now with 10,000 more miles easily. My payment is $426 a month for 60 months financing 25K.

 

[turbobrick]

How is the average payment $700/month? That's a ridiculous amount. I mean its clearly people buying more car than they can afford, but I'm surprised at the numbers.

I wonder how much of that is negative equity being rolled into a persons new loan.

Unfortunately the used market isn't much better:

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Well, you can always just go older, or just keep your current car. But considering how bad the average person is at actually maintaining their car, its probably not the best idea.

 

[Zarmander]

Sucks the US and Canada give you only one option that is feasible in most places. Feels terrible to be stuck driving for basic stuff like going to work or getting groceries. Outside of cities your options are crap. Hope we invest intelligently for the future. The answer isn't doubling down on cars, even if they're electric.

 

[Chaosblade]

Buying a new car has always been a luxury since used vehicles always offered substantially better value. What percentage of vehicle sales are new? Without looking, I'd guess a third, tops?

To me, the bigger issue is the limited availability of used cars and the sky high prices on those now.

 

[SirKai]

I remember reading about the used car market getting nuts after covid ramped up. I'm so relieved I got my car bought and paid off back in 2017.

 

[Superpupperbabysassy]

My Tesla was at 50k. My note is 730. I don't have to worry about gas so it helps

 

[TheHunter]

My brand new Corolla SE 2020 was 19k.

Spend less on cars people.

 

[neoak]

Was checking prices of my car, bought it years ago.

Its 10k more sticker price for the 2022 with similar features as mine. Jesus.

Bought my car to keep it forever or until it gets totaled.

 

[Dr. Mario]

Welcome to Western Europe, America.

Of course 47k nets you a sedan here, not a megatruck.

Of course we do have functioning public transport. High prices for new cars is not bad given the state of the environment, being dependent on them for everything is.

 

[Muu]

Buy new and pay insane monthly rates, buy used and randomly get hit with high maintenance bills, damned if you do and damned if you don't tbh.

Our current nanny doesn't have a car, she had issues coming in walking or on her walmart bike so we lent her our ebike and she's been consistent as hell since. I thought the insane price of cars and gas would push wider adoption of electric bikes, but apparently America's hate boner for cycling in any shape or form is still winning out.

 

[turbobrick]

Welcome to Western Europe, America.

Of course 47k nets you a sedan here, not a megatruck.

Of course we do have functioning public transport. High prices for new cars is not bad given the state of the environment, being dependent on them for everything is.

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What's used car pricing like though? I just know from my time browsing UK classified, which I'm sure doesn't represent all of western Europe, that older cars are much cheaper than in the US.

 

[Piggus]

Suuuuper relieved we got our car when we did (~Jan of last year). It was just before supply got thin and prices went crazy. Paid just over 30k and close to msrp. The used car market is nutty… Our car has around 8000 miles on it and is worth quite a bit more than what we paid, and it's been that way for a while now (granted it's a Subaru, and they don't depreciate quickly). I love the thing, but paying $80 to fill it right now hurts. Would probably be able to afford a lower-trim Model 3 or Y or something similar if that were going to the payment instead, but hoping to just ride it out and let EVs get a bit better/more common first. :/

 

[RisingStar]

Glad that I bought out my Jetta from its lease ending last fall every month now. Sure, it's no Ioniq 5 EV lifestyle, but it beats having to pay insane amounts per month, assuming you can even find one in stock. It's under 60k km so just need to take care of it for a few years before I do make the shift.

 

[Cipherr]

It's the worst for people like in the story that have a decent car, but get forced into this market by vehicle accidents.

Imagine being lucky enough to have a decent vehicle that you keep maintained, then someone comes along and totals it, now you are out here in THAT mess trying to buy something equivalent 😰

 

[Blitz]

new 2016 Rav4 LE cost me $24,000.
6 years later...
new 2022 Rav4 LE cost me $34,000.

my 2016 rav4 got totaled and I need to get a new one just this month.

 

[Theorry]

I never understand why in america everything is paid with credit also. Here most people buy a car with saved money and pay all of it right away

 

[turbobrick]

I never understand why in america everything is paid with credit also. Here most people buy a car with saved money and pay all of it right away

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I don't know where here is, but getting a loan for a new car is definitely not exclusive to america

 

[Theorry]

that's not exclusive to america

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Oh for sure. But when i read this and when i was visiting many times everything is so much on credit. Always felt unhealthy to me.

 

[Dr. Mario]

What's used car pricing like though? I just know from my time browsing UK classified, which I'm sure doesn't represent all of western Europe, that older cars are much cheaper than in the US.

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I can't speak for all of Europe, but my car broke down around Christmas, and I also discovered it was my luck used car prices had risen by 20% right before.

 

[Deleted member 38556]

Welcome to Western Europe, America.

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Western Europeans don't even need cars, not the case in America as far as I've read.

 

[ToddBonzalez]

I never understand why in america everything is paid with credit also. Here most people buy a car with saved money and pay all of it right away

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How many people got $47k they can pay upfront?

 

[Mediking]

Yeah, I bought a used car a few months ago and the payments are hitting hard but I can do it… barely

 

[Darkstorne]

What's used car pricing like though? I just know from my time browsing UK classified, which I'm sure doesn't represent all of western Europe, that older cars are much cheaper than in the US.

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Not sure how true that holds at the moment though. Ever since Covid the second hand car market has been shafted in the UK. Lack of chips for new cars means a lot of people have been forced to buy second hand rather than face month's long waiting lists, which means the second hand market has skyrocketed in price. I had to buy a second hand car last month and learned that the hard way =/

in 2018 I bought a second hand Nissan Juke Tekna, 2016 model, 13,000 miles on the clock, for £10.5k.
In 2022 I can find a second hand Nissan Juke Tekna, 2016 model, 13,000 miles on the clock, for £12k+.

Something's not right there...

Didn't buy a Juke though since mine crapped out at 75k miles. Gone for a hybrid Toyota for the more reliable brand, but man did it hurt the wallet... I had been hoping to get two more years out of my Juke, let the second hand market recover, and then buy a second hand electric. But no chance of doing that with today's market =(

 

[Theorry]

How many people got $47k they can pay upfront?

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i dont know. But 47k is alot of a new car even. Seems not healthy to go in debt to afford one. You can get a good car for way less used etc.
I bought a used car for 11.000 euro last month and paid it all directly with my savings. We really dont use credit for that at all here.

 

[Darkstorne]

How many people got $47k they can pay upfront?

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To be fair, the answer to that is "who really needs to spend $47k on a car?"

I bet you probably could live without heated seats.

 

[shinobi602]

i dont know. But 47k is alot of a new car even. Seems not healthy to go in debt to afford one. You can get a good car for way less used etc.
I bought a used car for 11.000 euro last month and paid it all directly with my savings. We really dont use credit for that at all here.

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Almost two thirds of Americans live paycheck to paycheck. It's good that you have the savings to do so, but a large amount of people can't even afford that.

 

[Theorry]

Almost two thirds of Americans live paycheck to paycheck. It's good that you have the savings to do so, but a large amount of people can't even afford that.

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Yeah that is sad to see. I guess its also depending on the country. In US a car is maybe more needed then here. We are smaller and have good public transport.

 

[Absoludacrous]

Almost two thirds of Americans live paycheck to paycheck. It's good that you have the savings to do so, but a large amount of people can't even afford that.

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Yea, just casually wondering why people don't have $11k in savings so they can buy a car upfront is certainly a privileged take.

 

[Terbinator]

I know it says manufacturing focus shifted to SUVs but really people need to stop buying those monster truck-lites over there. You don't need them - get a normal sized car.

 

[Deleted member 2802]

Average is a poor metric, I wonder what the median is compared to median incomes.

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Exactly. The average can be skewed much higher because mostly rich people are buying new luxury cars.

 

[m_shortpants]

Ah yes, the American dream. Paying exorbitant costs for the bare necessities of life.

Exorbitant prices for housing, and now also outrageous prices for transportation because 99% of the country has no viable public transportation, and cities are designed for cars.

This shit isn't sustainable.

 

[turbobrick]

Not sure how true that holds at the moment though. Ever since Covid the second hand car market has been shafted in the UK. Lack of chips for new cars means a lot of people have been forced to buy second hand rather than face month's long waiting lists, which means the second hand market has skyrocketed in price. I had to buy a second hand car last month and learned that the hard way =/

in 2018 I bought a second hand Nissan Juke Tekna, 2016 model, 13,000 miles on the clock, for £10.5k.
In 2022 I can find a second hand Nissan Juke Tekna, 2016 model, 13,000 miles on the clock, for £12k+.

Something's not right there...

Didn't buy a Juke though since mine crapped out at 75k miles. Gone for a hybrid Toyota for the more reliable brand, but man did it hurt the wallet... I had been hoping to get two more years out of my Juke, let the second hand market recover, and then buy a second hand electric. But no chance of doing that with today's market =(

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Yeah, I could have specified a bit more. I usually buy cars that are 15+ years old, which I realize the average person isn't buying. There's still a good amount of sub £1000 cars I see listed that are much nicer than what you can get in the US for that money. You'd have to spend over twice that for something similar.

Though if it were me I probably would have just fixed the Juke. Unless of course it had a CVT, then you definitely made the right choice getting rid of it.

 

[Theorry]

Yea, just casually wondering why people don't have $11k in savings so they can buy a car upfront is certainly a privileged take.

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I didnt say that at all. Believe me it wasnt "casual'' at all. Its maybe how i am raised. I come from a family wich didnt have alot of money also.
And even know i am doing fine. But i am smack in the middle of average income. Its i am learned that you only spent money you have.
We really dont use credit cards here or pay off deals. But like i said. In US a car is more needed because of the distances and poor public transport. That even with low income you are kinda forced into buying a car on credit. Resulting in more problems.