New Cars Are Only for the Rich Now as Automakers Profit From Government Policies That Help To Rake in Profits

February 14, 2023; The AIADA Newsletter reported that a shiny new car in the driveway has been an emblem of middle-class prosperity for generations. But for the typical American family, it’s now a distant dream.

According to a recent report by Bloomberg, the average price of a new vehicle has risen by more than 10 percent since the start of the pandemic, making them increasingly affordable for the average consumer. Automakers have been able to capitalize on this trend, as they have been able to keep inventories low and prices high, allowing them to rake in huge profits. The pandemic has also seen a shift towards electric vehicles, which are more expensive than traditional cars, further increasing the cost of new vehicles. Additionally, geopolitical tensions have led to wealthy investors across the globe buying up luxury vehicles [1], driving the prices even higher.

The average monthly payment for a new car has soared to a record $777, nearly doubling from late 2019, according to Kelley Blue Book owner Cox Automotive. That’s almost a sixth of the median after-tax income for U.S. Households. Even used models have climbed to $544 a month on average, reports Bloomberg.

The sticker shock extends well beyond the U.S., where inflation is a thorny political issue for President Joe Biden as the 2024 election looms. “The idea of a new car in every American’s driveway is not the world we live in,” said Charlie Chesbrough, a senior economist at Cox.

For a decade, the average new-car payment in the U.S. bumped along at roughly $400 a month. That’s about as much as the typical American household can shell out and still meet other major expenses, said Jonathan Smoke, chief economist at Cox. But it crossed that mark in November 2019 and has been soaring ever since.

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