You may experience an extreme case of sticker shock the next time you visit the car dealership. The average new car price in December 2021 was more than $47,000, up 14% (or nearly $6,000) from the same period just one year prior.
The price rise is the result of dueling extremes in automobile supply and demand. The latter has been historically high for months. It has been fueled by factors including more workers returning to the office and needing cars to get there and people having more cash on hand to purchase vehicles because of the reduction in activities like vacations and dining out. Plus, auto loan interest rates remain low.
But as demand for vehicles has surged, supply has dwindled. Auto manufacturers around the world have been suffering from a global computer chip shortage and drastic supply chain issues.
The result is record-low inventory numbers. There were fewer than 900,000 new cars available for sale to American consumers last fall, according to Cox Automotive. That’s down from nearly 2.5 million in 2020 and 3.5 million in 2019.
The outlook doesn’t look much more promising, as the current war in Ukraine has already showed signs of disrupting supply chains even further.
All of this turmoil is ultimately paid for by the consumer. In February, Edmunds reported that more than 80% of new car buyers are paying above sticker price. The effects of the volatile new-car market has now trickled down to used cars.
With less new model year vehicles available, shoppers have been turning to used cars, making them hot commodities. In turn, the average listing price for a used car has risen to a record-high $28,000.
Don’t let high prices scare you off from purchasing a new vehicle – and don’t spend more than you need to. As always, AAA is here to help. AAA’s Auto Buying Program allows you to compare vehicle reviews and lock in savings before visiting the dealership. Members save an average of more than $3,400 on new vehicles.
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10 Thoughts on “New and Used Car Prices Climbing to Record Highs”
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I would just like to reiterate what my son John said on March 15, 2021; I believe it is short-sighted on the
part of the American Business community to go for the ‘Short Game.’ If the stock holders would only realize
that robust recovery starts with exhibited patience. They will always see gains long-term. They become
part of the solution not part of the problem.
Hey, I look around my area. You cannot even park in the dealer lot as all spots are loaded with cars. They have storage areas for cars they cannot store on their lots. Some of them go for as long as the eye can see.
Corporate America planned shortages to jack prices up. Just a gimmick to take your money that you may have saved. My car is still in good shape. If they do not want to sell cars, I can wait until they do. Buy American – why?
Americans love conspiracy theories. Used cars are often acquired at auctions by dealers. Highest bidder wins. Dealer said buyers were pre-ordering them at prices as much as $10,000 above sticker. Pre-pandemic, he said a new car never sold for sticker price.
Does anyone know of dealers are also offering more money on trade in ? Thank you so much
CarMax in Danvers
On the South Shore here in Massachusetts, Used Car Lots appear to have plenty of inventory. Perhaps the used car dealers have raised their prices to a point where folks trying to recover from their financial losses due to the COVID pandemic just can’t see fit to pay the higher prices asked at this point. Everyone has taken some kind of financial hit this past year, businesses as well as individuals. But, if the ‘American’ business community wants to see a robust recovery and a long term secure financial future they should go with the ‘long game’ and keep prices stable for months to come. This gives everyone time to recover, makes the people begin to believe that US business is really part of the recovery solution. This is the type of PR that gets noticed and goes a long way to make for a friendly Business/Consumer relationship in the future. My advice to the investor community…go with the ‘long game.’
I agree.
Although you had Used Car in the headliner and tag
You only gave information in the article about NEW car prices soaring
Not once did you mention anything about USED vehicles
Read the last paragraph again.
I’m not sure if you read the entire article, buy you would have seen they did.
Here’s an excerpt from the article:
The effects of the volatile market for new cars has now trickled down to used cars, as well. With less new model year vehicles available, shoppers have been turning to used cars, making them hot commodities. According to CNN, some measures of the used car sector show the greatest scarcity on record. In turn, the average used car is now roughly 30% more expensive than it was last year.