The Challenges of Buying a Car Today
Buying a new or used car in the United States has become increasingly difficult due to climbing vehicle transaction prices and shifts in consumer preferences.
- Vehicle transaction prices have risen higher and faster since 2020 than any other point in over 35 years, according to recent Bureau of Labor Statistics data.
- The consumer price indexes for both new and used cars are much higher than they were in 2019.
- Inflation for used cars has been cooling down since December 2022, but used car prices still have a long way to go before approaching 2019 sales prices.
- The average transaction price for new cars has increased by nearly $12,000 in the past five years, while used cars remain nearly $9,000 higher than they were in February 2018.
- The rise in prices is similar across regions of the United States, with preferences for more expensive vehicles in some areas driving these differences.
- Consumer tastes have shifted towards larger and more expensive pickup trucks and SUVs, which drive up prices and create incentive for automakers to produce pricier rides.
- The decline in leasing trade-ins and rental car companies competing with consumers for the same limited supply of three to five-year-old vehicles is still affecting the used car market.
- Car buyers haven’t seen price hikes like these since the 1970s and 80s, with the 2020s being unique in terms of how much car prices have risen in a short period of time.
- The road to more reasonable prices for new and used cars remains challenging, and hindrances to the US market are not expected to go away anytime soon.