Nasdaq 15, Russell 2, Crude Oil Gold 1, Silver CMC Crypto 1, FTSE 7, Nikkei 29, Read full article. More content below. In this article:. New car prices are being pushed higher by low inventory. Source: Goldman Sachs. Story continues. Read more. Recommended Stories. Supplementary notes. Other statistics on the topic. Mathilde Carlier. Research Expert covering transportation and logistics. Profit from additional features with an Employee Account. Please create an employee account to be able to mark statistics as favorites.
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Auto sales actually dropped 7. This coincides with research showing that many car buyers are giving up on purchasing vehicles as the chip shortage leaves dealers without enough new cars to sell.
Earlier this year, high demand and low inventories fueled automaker profits. While new cars are still less available, KBB's latest data shows that luxury car, pickup and midsize SUV buyers are driving the average price increase in September.
The sales that did happen involved fewer entry-level cars, hatchbacks and other affordable vehicles, but included more luxury cars, whose sales increased Worse yet — due to ever increasing prices, and high-depreciation.
Current combined mpg is about about No wonder auto manufacturers are making record amounts of revenues, and profits! Or wait, is that another wrong conclusion? Just remember to have insurance!
No ill will, just needed to say the truth and did so. Good for you on that count! Never underestimate how irresponsible people will be with their money, especially when it comes to a status symbol like a car. However, you can take solace that most new car buyers are older and better off than average.
Younger, poorer people buy used, although the loans on those cars would probably terrify you even more. One of the main factors contributing to higher transaction prices is the popularity of trucks and SUVs, which automakers are able to charge more for. We make the money to afford it no loan but we are not FI yet. I got a really good deal on my German sedan lease and must have a new car for work car plan. The top 3 selling cars in US are: 1.
Ford F PU 2. Check Silverado PU 3. Well, your post was begging for a comment from someone in the Motor City, so I had to add this…. Cars are incredibly expensive to build because of all the labor that goes into design, manufacturing, legal costs, etc.
What I DO find appalling is the average car loan. First starting with whether or not you live in Metro Detroit haha. Then adjusting for your cash financial situation and not just income level. Can you explain why cars are almost twice as expensive as they were 15 years ago?
Surely they had the same design, manufacturing, legal costs, etc back then. Does he? If so, how much? Does he get like one of those discounted company leases? My recent car purchase is the topic of an upcoming post…So spoiler alert! So I dumped the money pit in favor of a used and decidedly unsexy minivan.
Me: Because of this conversation! Sorry about the GMC Arcadia. I have never heard of the GMC Arcadia win any reliability or value awards. What made you bring yourself to buy that one? The cost is the same. Unfortunately this will happen whenever people can borrow money for something. The borrowed money becomes like Monopoly money in their minds — they just forget they have to pay it back.
It might be different when their financial situation is at risk. We owned a luxury car not too long ago and is still for sale actually.
We loved riding it and have absolutely no regrets as to buying it a few years ago. At that time we had the opportunity and financial assets to do so. And yes, based on all the reactions we got it sure is about status to most people.
But when talking about our goals and how much money we would save, everybody understood. What was your luxury car, how much did it cost, and why are you selling it?
Are you buying a new luxury car? If so, what? Seriously eye opening numbers. Even if you realize the mistake of overpaying for a car, at least hold onto it as long as you can by taking care of it so you can drive it for a decade or more. Or sell it and get a used Corolla. The SUV and minivan market is crazy and every new couple thinks they need one if they are having a kid.
Better a bigger car for a kid than a smaller car. But everybody is driving a beast, hence I need to drive a beast to, to increase my chances of survival if I have a kid.
Per the comments above, there are three kinds of people when it comes to cars:. They may pay extra for features they care about safety, convenience, etc , but will generally not buy expensive cars. Many FS readers fall in this category, as do my in-laws. They will trend toward certain makes and models, they will load them up with options, modify them with aftermarket cosmetic upgrades, and they will frequently trade them in for something newer and better.
A lot of my friends fall in this category. They, too, will buy expensive cars, but will often skimp on options, or do stuff like pay extra to custom order a vehicle WITHOUT a moonroof, to lower the weight and add lateral stiffness. They will often become very attached to their cars, and own them a long time. This is me. Purchase price is only one component, and can be ameliorated by owning the vehicle farther into the depreciation curve.
If you live in an area with low insurance rates, take advantage of strong manufacturer discounts and promotional financing I got.
In short, you can have your cake and eat it too, which is what our family does with BMWs and Audis. The economy is not booming, people are not making tons of money. You need to get out of SF or Honolulu and come to my neck of the woods which represents typical America. People who can afford new cars buy used unless they own their own business and can lease or write off depreciation.
Whenever I buy a car used I have a long conversation with the salesman. My last purchase, I took out a 3 year loan on a one year model only because the rate was 0. One third of car trade ins are under water. That tells me people have no patience to own a car long enough to be payment free. They simply roll the old loan into the new one which means the cost of a new car is even more expensive when you factor in they are paying for the old car with the new one!
I know people like this and they are not making money. They have little saved for retirement and simply live week to week. Actually, half of America lives on the coastal cities. Why is half of America not typical America as well? Even folks who do not live in the coastal cities or commenting about the rise of trucks and SUVs. Are you saying that most Americans are spending too much and are illogical with their finances?
Years ago the same car was almost half that price! Thanks for this insight new reader only 20 years old and this is exactly the past push of knowledge I needed to sell my 25, jeep and only making about 50,00 a year thank you! The only reason I may buy a newer still used car is to go for an electric car. I drive an hour into San Francisco once or twice a month and am tired of 1 paying for gas and 2 not riding in the HOV lane.
With an electric car in Cali you can get a pass to ride in the HOV lane as a single person…. I will only be doing this if my job ends up requiring a weekly commute into town.
Otherwise my commute is 3 miles each way and I figure I can make my current 6 year old car last another 15…. Yikes, 1 hour commute EACH way? Why not live closer to work or find a closer job? Are you driving into SF to meet clients? Commuting makes me very unhappy.
I am a physician and had been coming into town to help cover some shifts and also meet all of the docs at the main campus we send a lot of patients from up here in Santa Rosa to San Fran …. I have 2 more shifts in January and then am done. After that it is a 3 mile commute daily from my home to the local hospital. I have thought about biking it but I live up a ft mountain and have not gotten over the mental block that has kept me from biking it yet.
The only caveat may be if I start to set up a regional program. If that is the case, then I may need to come to the city times a month. If I do need to do that, hello electric vehicle and HOV lane. Commuting does blow, particularly during rush hour. One day it took me 3 hours to go 70 miles. But then I think to myself, all this traffic must mean the economy is good.
Then I think about my investments. Then I think about all the people working to make a profit for my investments.
I never book anything around rush hour anymore. Life changer. If I do have to do the mega commute in the future I am going to negotiate a 10 am arrival and a 3 pm departure. That way my work day remains still…as opposed to leaving at 6am now, staying in town until 7pm and getting home at 9….
I am there the day before unfortunately January 31st. Maybe the timing will work out in the future so we can meet. In the meantime, money that would have gone to the car instead went to my retirement accounts.
Why not stick with the old ones? Commuting miles round trip will do that. Not getting a large car and stuffing my family into a four door sedan is totally worth not spending twice as much for a Justice Van. If only to call it that daily and annoy those I love most. The only bummer is when your aluminum frame gets a ding. Another factor would be people trying to one-up one another by having a newer and more fancy model.
That would be much more beneficial as they could then slowly pay off the loan while keeping their money in the markets. Is trying to one-up someone really that common regarding cars though? I would often see people switching cars every 6 months to 3 years, depending on their level within the company. Most of them actually go for leases too, which are must worst than financing or even buying a car right-out.
I did recently take out a low interest loan for the bulk of my mid-life crisis car, a new Audi S6, with a completely redone aftermarket audio system. Congrats on your income. Did you just start making this kind of money? My son is going to college next fall and received enough scholarship to cover a significant portion of his undergrad.
Feeling generous I told him I would buy him a car….. Those numbers are truly insane. I love that car. I want one. Never paid any interest. Toyotas and Hondas seem to go forever. Simply too cool to pass up if it really ends up being anywhere near 35K like they promise. Also, we acknowledge that the median price of a mass market car makes for a better comparison. After paying for their college, I retired early taking the advice similar to that of Financial Samurai.
So, only now the Tesla. Hardly the end of the world. In the modern world, cars are more reliable than before hence they last longer and cost less to replace parts and they use less fuel.
So can afford to buy more expensive cars than before inflation notwithstanding. Pretty much everything is more expensive than that now. Then again, we might get a big recession and a big discount when the time comes. Maintenance is a huge expense with luxury brands. Wow that is so high! Those are some mind-blowing statistics! There are far too many nice and new cars on the road.
I make this point out of true concern rather than jealously. My hope is that these people buying new cars will at least hold on to them for awhile to lower their cost per mile although ideally they sell and buy a cheaper, more affordable vehicle. Thanks for all your doing Financial Samurai to educate us all!
I wish they would pass a law, where people had to read a few of your car buying posts before buying a car. They still may make the same, dumb decision but at least they could no longer claim ignorance. The high car loan value is. Especially because I think those 30k loans are used for buying 35k cars. Nice car. Do you have a family?
Definitely a great car for a family of 4. No regrets. We just did an article discussing underwater conditions. Financed the car for 3 years at a 1. I mean come on. Neighbor four houses down has one and parks it on the street.
Maybe my quaint hood is getting fancier! Another point is the amount of actual time people spend in their vehicles, so they want the comfort and the newness. I am definitely an outlier at my corporate gig — meaning I actually live in the city and less than 5 miles from where I work.
The majority live out in the burbs and ex-burbs — driving 30, 40, 60 minutes plus. I guess if I were to spend that kind of time wrapped in steel and plastic, I might consider a ride that was able to pound the BASS!!!!
My dad commented on how dirty my Honda Fit was when he visited a couple months ago. I thought it was just fine. Different strokes for different folks I guess! I definitely agree with Apathy. The truck and SUV are what are pulling up the average price of the car in america.
Look at the F best selling truck in America for 40 years starts 26,, but thats just the base model used by landscapers and contractors. Another quick point. The one thing you may not have thought about is the increase in overall quality of all vehicles today compared to the past. Cars and trucks can easily put k miles on themselves now numbers that were unthinkable years ago. Modern manufacturing techniques and newer and better motor oils have made this very possible.
This does make the upfront price of the car or truck worth it if you intend to own it for years which almost nobody does anyway. This increased quality does also make the case for the used vehicle much stronger as well. Keep up the good work. Is the surge in pickup trucks because many more of us are becoming contractors on heavy load haulers? You are the sum of five people around you. I was flabbergasted when I visited the US for the first time.
The number of cars, and their sizes, were daunting. I guess anyone from another country would feel the same way. After more than a decade of traveling in and out, I still get surprised looking at those long lines of big cars carrying just one soul. Are you from Europe?
I love all the small cars there. So efficient and useful. Too bad the risk of death is higher in the US due to highways and massive cars. When I was in college, they came out with the Camaro concept car, and I wanted one.
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