The Average Cost of a New Car Hit an Eye-Watering $48,000+ in March 2023
Experts say automakers have leaned into pricier cars due to the global chip shortage.
A lengthy new piece in the Washington Post published on May 7 speaks to an alarming trend: More and more Americans are being priced out of the nation’s new car market.
Recent data from the 2021 Consumer Expenditure Survey show automakers are selling fewer new cars in the U.S. than they did before the pandemic, but that their revenue still increased by $15 billion in 2022.
Experts say automakers have leaned into pricier cars due to the global chip shortage. The scarcity forced carmakers to ration their components and reserved it for more pricier models.
As a result, the average price for a new car hit $48,008 in March 2023, according to Kelly Blue Book. That’s more than a 30% jump from the year before.
WaPo writes that, “In 2017, for example, there were 11 models available on the U.S. market for less than $20,000,” but now, that number is 2 as of March 2023.
Monthly payments on new cars are also on the rise. For years leading up to the pandemic, the average monthly payment for a new car hovered between $500 and $600. In April 2023, payment hit $730.
The side effect from higher interest rates and pricier cars is now widening the affordability gap.
“When you do the math on what that means to a median household, it is basically pricing the median completely out of the new vehicle market,” said Jonathan Smoke, chief economist at Cox Automotive.
Economists and auto experts say lender leniency during the COVID crisis is now drying up, especially for lower-credit consumers who make up the subprime loan market.