Buying a new car in the U.S. has never been more expensive

Last Updated: August 12, 2022By Tags: , , ,

The cost of new wheels in the U.S. is getting more expensive seemingly by the month. The average price Americans paid for a new vehicle in July hit a record high of $48,182, according to automotive research company Kelley Blue Book.

And prices are likely to continue rising because demand for new vehicles is unusually high while inventories are low compared to previous years, experts told CBS MoneyWatch.

“I see nothing but increases for quite some time,” said Ivan Drury, senior manager of insights at Edmunds. “And it’s horrible because, unless you can wait it out, you’re going to end up paying a premium.”

Kelley Blue Book data shows that the nationwide new vehicle inventory sat at 1.1 million in July, the same number as last year. That compares with 2.5 million in July 2020 and 3.6 million in July 2019, before snags in the global supply chain and difficulty getting semiconductors prevented automakers from pumping out as many new vehicles as they would have hoped.

“Prepare to pay through the nose”

For car shoppers, the upshot is they’re likely to pay well above above sticker price, with some dealerships marking up hot vehicles by $10,000 or more.

For those who can’t afford a new car, Kelley Blue Book Executive Editor Brian Moody suggests shopping for a less popular used vehicle.

“I would be looking for a sedan or hatchback,” he said. “That’s where the best prices are going to be. You’re going to be able to find things in the $20,000 to $30,000 range — so that’s the place you’re going to look for a bargain.”

Automakers sold roughly 17 million vehicles every year between 2015 and 2019, but the coronavirus pandemic halted that trend once Americans were forced indoors. More than 3 million U.S. customers were unable to buy a vehicle in 2020 even though they wanted to, Drury said.

Another reason prices are climbing: Customers are willing to pay for upgraded models of certain vehicles. Customers are particularly fond of fully loaded SUVs and pickup trucks with leather seats, touch-screen consoles, new safety features, and other bells and whistles, Drury said.

Electric vehicle prices are also skyrocketing. Earlier this week, Ford upped the starting price of its F-150 Lightning by at least $6,000. Rivian, GM and Tesla have all raised their EV prices as metal costs have soared, along with the cost of materials like lithium, which is to make batteries.

EV buyers may be able to get tax breaks on a new or used EV under the Inflation Reduction Act, part of the Biden administration’s effort to boost electric vehicles sales so they account for half of all cars in the U.S. in less than a decade.

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