Yikes, I've bought multiple new cars and not spent that much on any one of them.
Photograph Courtesy Mazda • Illustration by Colin Wood
Have you priced a car lately?
According to an article published by AP News using data from Edmunds.com, the average price of a used car this past November was $29,011, “a dizzying 39% more than just 12 months earlier.” New car prices also saw a sharp increase, with the average “edging toward $46,000.”
On top of that, Edmunds senior manager Ivan Drury notes that monthly payments for used cars alone are on the rise, averaging over $500–the average amount paid monthly for a brand-new vehicle just five years ago.
What, then, has caused such a drastic rise in vehicle costs? The article points out two key factors:
So, if we’ve identified the problem, when can we expect prices for new and used cars to settle? It could take years:
“Given pent-up demand from consumers, prices for new vehicles are expected to remain historically high until the supply returns to around 2 million or 2.5 million and automakers resume discounting, which could take well into 2023. Once new vehicle prices do ease, the pressure on used-vehicle prices would eventually follow.”
The article mentions, however, that vehicle availability will likely continue to be tight after that point as “traditional” sources of used cars–like former leases, trade-ins and vehicles sold by rental companies–have “essentially dried up.”
The good news? J.D. Power Senior Manager David Paris points out that the fly-and-drive method looks to be the best way to score a deal right now: “If you look hard enough and are willing to wait and travel, you can find deals across most brands.”
How have these rising prices impacted your buying or selling?
Yikes, I've bought multiple new cars and not spent that much on any one of them.
Choice to buy a car at pre-pandemic pricing last summer: validated.
Good thing I have four extra cars. I won't run out anytime soon. 
I bet people hanging on to clunkers instead of selling them for $1000 and moving on has certainly affected this.
I look forward to the GRM $30k challenge. Any word as to whether recoup will be allowed?
Pete. (l33t FS) said:I bet people hanging on to clunkers instead of selling them for $1000 and moving on has certainly affected this.
That and people buying 1-3 year old cars instead of buying new because that's all that's available.
I'm glad I didn't try to squeeze one more year out of my '98 Buick and replaced it in early 2020. Would have been in for hanging onto it a long time otherwise.
Or ended up making a completely unhinged decision like thinking this MGB GT would make a good daily driver.
dps214 said:Pete. (l33t FS) said:I bet people hanging on to clunkers instead of selling them for $1000 and moving on has certainly affected this.
That and people buying 1-3 year old cars instead of buying new because that's all that's available.
Saw something on Jalopnik this morning. Last quarter 9 new Impalas were bought at various GM dealerships.
They ended production of them somewhere around a year and a half back. All I can think is that they had a great deal to get them out of there.
It would be interesting to see the average age of those used cars, to see if that's changed. Are these 1-3 year old cars going for new car prices due to the lack of new cars, like dps214 said? I suspect so. Our local Chevy dealership ("America's #1 discounter of automobiles!!!!") has a huge lot that is completely empty. It looks like they've gone out of business.
A friend sold his Tacoma, bought new, for what he had in it a few months ago and bought a Hummer H3. He's thrilled with the money aspect of things, but now he's driving an H3 :D
Man, what a weird chain of events.
Interesting bullet points from the article:
"Last month, the average used vehicle price was 63% of the average new vehicle cost. Before the pandemic, it was 54%."
"What used to be a $5,000 car,” the car dealer said, “is now $8,000. What used to be $8,000 is now $11,000 or $12,000.”
"Including taxes, fees, a 10% down payment, and an interest rate of around 7.5%, the average used vehicle now costs $520 a month, even when financed for the average of nearly six years"
"Monthly payments for the average used vehicle, he noted, were $413 two years ago, $382 five years ago and $365 a decade ago. The November average payment of $500-plus for a used vehicle, Drury said, is about the average that was needed five years ago for a brand-new vehicle."
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