If you’ve been feeling like you’ll never be able to afford a new car that you actually want, you’re not alone. The Washington Post recently dug into what’s going on with new cars’ lack of affordability, and you’ll be happy to hear that, yeah, new cars are basically just for rich people now. Which sucks.
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Back in 2017, if you wanted a car that cost less than $20,000, you had 11 options. Fast forward to March of 2023, and that list had been narrowed to only two. The average price of a new car is currently more than $48,000, up 30 percent over the last three years. And while there are plenty of cars with a base price lower than $48,000, it’s still hard to find them since automakers facing a microchip shortage focused on mostly building more profitable high-end versions of their cars.
In fact, while automakers sold about three million fewer cars in 2022 compared to 2019, their profits were reportedly $15 billion higher because what they sell is more expensive.
“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, and leaving higher-income households that disproportionately have more wealth, better credit, and as a result, can afford even more expensive vehicles, so the migration even accelerates in those price points,” Jonathan Smoke, chief economist at Cox Automotive, told the Washington Post.
And while you’d think the dealers would be happy to sell a bunch of more profitable models, that’s not necessarily the case. The supply of rich people isn’t limitless, after all, and there’s no guarantee they’ll be able to sell the expensive models they receive.
“We have some final edition Dodge Challengers for $80 or $90K,” one dealer told the Washington Post. “We don’t even want another one.” They later added, “I’ve got a few that are so expensive, I would do anything to get them off the lot. I’m just giving people prices so that we would just break even. That’s how desperate I am to dump this expensive stuff because it’s hurting us.”
So you might be able to get a deal on the $90,000 version of a $30,000 car, but it’s not like that means much to regular people who can’t afford a $700 monthly car payment, much less one that’s more than $1,000. But hey, maybe if you work hard, you’ll get a three percent raise next year and still not be able to afford a new car.
There’s a lot more in the article, so be sure to read the rest here.