It’s not just the used car market that’s hopping right now — new cars are selling for the record average price of $30,748. That’s 6.9% higher than a year ago, because consumers are feeling fancier these days and choosing expensive options for their new vehicles.
The Detroit Free Press says this is a sign of the rebounding industry. Cars are going for higher prices because there’s more of a demand for them. In the wake of the recession, many auto dealers are carrying less inventory on the lot, and there are fewer dealers around as well.
Add in the increase in available credit for consumers who want to junk their clunkers and trade in for more fuel-efficient vehicles to combat rising gas prices, and you’ve got a market for new cars.
The increase in prices will keep it up for the next few months before stabilizing and then once again rising next year, say industry experts. And even though there are less deals out there, people are still ready to buy — U.S. auto sales for March were at a 14.4 million annual sales rate, up from 13.1 million in March 2011.
Automakers find sweet spot on prices [Detroit Free Press]
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This couldn’t possibly be bolstered by raising used car prices, could it?
Also, no surprise that after massive government money dumping we’d see items inflating. Heck, I now pay twice as much for bread today than I did just 4 years ago. Surprised cars are only experiencing 6.9% inflation.
Grain prices have been skyrocketing around the world- it has nothing to do with ‘massive government money dumping’. Increased middle-class populations = all food prices rising.
Agreed, my family’s run a small farm for 70 years. Going by prior years’ records the prices are coming back inline with what people were paying for food in the 50′s and 60′s (Adjusted to inflation of course).
Americans have been outright spoiled by cheap food for decades.
I’m wholeheartedly surprised that a giffen good would have increased sales due to people moving up in class. In fact, the definition of a giffen good is that as people have less money to spend, or as prices rise, it increases in sales.
Not true, go down to Mexico. The exact same loaf of bread is $2 instead of $4.50 in California. What gives?
People in California can afford to pay more for bread than people in Mexico. That is what gives.
Besides the whole ‘afford it’ thing, many world governments directly subsidize certain staple foods.
I’ve been thinking about buying a new car lately.
Not me. I am driving my 2008 Toyota Camry Hybrid until that thing dies.
Yeah well i’m driving a 1997 Chevy Cavalier. I think it’s time…
Nah. Treat a Cavalier right, and she’ll always bring ya home. :p
I have a problem…I see new cars and want them. Not to impress people, but just for the cool factor. The Veloster Turbo, 275 hp Genesis Coupe, the FT-86…so many new cars coming out I’d like to have, but I just paid mine off…
Ha. All through college my “plan” was that I would finally buy something I really wanted once I was employed and could make it happen.
Then I graduated and got a job. Decided I could wait and save some money, since my Honda was fine. Plus I wasn’t really making a “ton” of money.
Then I got a new job and made even more money, I could comfortably buy a new or new to me car. Still, the old Honda was paid for and doing just fine. Plus now my commute was pretty long.
That is still where I still sit now, 6 years later. In fact, we are probably replacing my wife’s 7 year old SUV first because it has a lot of potential problems apparently. Plus Virginia’s personal property tax helps keep those urges at bay. I priced it out for what my wife wants, it will cost over $1k a year in tax for a while.
I just get by on looking through cars.com and telling myself I “could” buy it if I wanted to. I saw a great low mileage, 2010 Audi A5 in dark blue with cinnamon brown leather interior yesterday. It would be a shame to put it through my daily commute though.
That’s a small house now a days. I still don’t think the new car market is as big as in years past. Too many dealers are still struggling if still in business.
Small house? Geez, where do you live? That’s 1/6th the price of a small house here.
Foreclosures in cities ironically like Detroit. In my area I’ve seen 35K minimum bid foreclosures not get one bid in a neighborhood that got 300k during the boom years(Actually the same house sold for 300k in 2007), in foreclosure by 2010.
About 10% down from 2007. Still, 40% up from 2009.
It’ll cost that much if you’re a chump and pay sticker.
Navigation and entertainment package is a $5k option that is almost useless. It plays a DVD, but no one sits in their car and watches movies. Also you can’t adjust navigation while driving which makes it a hassle, while phones have Google maps that can update on the fly. However, cars designed to have a large screen in the center console look chintzy without it. The solution would be to have an iPad dock in the center console. This would be grand.
“This would be grand.”
Yes, several grand.
Hah, that’s what I was gonna say!
Parents would really like for their kids to sit in the car and watch DVDs while they’re on vacation.
i don’t understand this and never will…i’m sorry it just creates stupid kids (and I’m speaking as an Army brat who moved from WA to AZ and then from AZ to CT ALL IN A CAR and under 5 years old)
kids don’t need DVDs to stay entertained in a car…can’t they just create games like we did when we were kids? or play license plate bingo? or find all the letters in the alphabet in the road signs?
Aftermarket nav and video systems are just plain better than the factory options, and maybe 20%-40% of the cost. Which is also why some car manufacturers try to hard to prevent you from sticking in a standard Double DIN sized unit: custom panels, proprietary controls, wiring the alarm system through it, not enough clearance…
My friend (who is comfortable, if not rich) blew the extra 3k or w/e for the entertainment center for her 4 year old. They make almost weekly trips out of state, so it has been well worth it.
I think I paid $3k for my options. Very pleased with my purchase. I could do without things like heated/ventilated seats and rain sensing wipers, but I could not imagine going back to a vehicle without navigation, backup camera, park assist, and an iPod connector.
Remember that the reason for having less used vehicles to choose from is the “Cash for Clunkers” campaign, which had a short term benefit of getting cash into people’s pockets, but had the long term drawback of having them pay more than they would have otherwise to continue to have a vehicle that runs. Of course, now that these prices are trending upwards, manufacturers will make more of the features “standard” to keep the price up there.
My awesome little Kia Rio cost a tad under 10k, and it gets me from point A to point B just like the expensive cars. No frills but air conditioning. I’m happy.
I can’t fathom going out and spending $30,000 on an “average” new car. A sports car? Maybe, but I’d still almost certainly buy used. I earn a solid salary, and between my wife and myself we’re in the low 6-figures, but $30k for a new car is still insane. Our two cars, both of which are fairly nice, are worth (and cost) less than $30k combined.
and how many kids do you have? Once you hit 3 your $20k 2 row seater is no go.
Zero, thank god.
You know, it occurs to me that this is largely because child safety laws now require children to be in car seats or boosters until they’re around 7, making it difficult to sit 3 across in the back like we did as children.
Not making any judgments here, I’m just saying.
Small kids’ seats are cheaper than a new car.
Virtually ALL cars are 3 across the backseat.
That is our plan. It has gone well so far.
It isn’t stylish or luxurious as a gas-guzzling money pit…but its a lot more comfy and safe than the 80s cars we were in as kids. It is efficient and safe basic transportation.
I drive a 20K truck based SUV. Plenty of room for everything.
The idea that you need to spend a lot of money escalates prices for everyone.
At least cars are mobile and don’t suffer from the “bad neighborhood” problem.
I easily fit 3 kids in the back of my Honda CRV, and it’s from 1999 built on the CIvic chassis.
The price is the average, not the model or the equipment. I’m sure the price of new luxury cars is what’s skewing this average price upwards.
I replaced my Ford Explorer last year and nearly every similar-sized SUV/crossover were over $30k. I was shocked. That’s a huge number of cars over $30k.
Used car prices are up, new car dealers see this
driving new car sales therefore they raise new car prices.
Correlation = causation?
It’s because Obama said that, hey, if you’re driving an old car that gets bad gas mileage, just go out and buy a new one! People must be taking his sage advice.
CLEARLY OBAMA IS RESPONSIBLE
To be fair, Cash for Clunkers got a bunch of cars out of circulation, which couldn’t have helped the price of any cars, used or new.
My take on that strategy is this: what makes anyone think that someone can afford a $300 or $400 per month car payment, and maybe increased insurance costs, to save a few gallons of gas per week? Maybe I’m not seeing the big picture, but if you’re having trouble coming up with money to buy gas @ $4.00/gallon, you certainly may have problems affording a car payment on top of still buying gas, albeit less gas.
If you’re a heavy commuter in an inefficient car, you’d be surprised how much you could save in gas. I commute about 20,000 miles per year (wife has a job in the town we live). If you commute that much and get 15 mpg (big truck/SUV), that’s 1333 gallons per year. Jump up to something that gets 35 MPG and that’s 571 gallons. That’s 63.5 fewer gallons every month, for a monthly savings (@$4/gallon) of $254. That’d pay a good chunk of the payment on a different car, especially if the old one is starting to nickel and dime you.
That points out something else; if you try to go even further – let’s say to a 55mpg hybrid, that’s 364 gallons, saving you only $69/month over the 35mpg vehicle.
Which is why hybrids so often don’t make sense(yet).
Hey it got a bunch of shitty gas guzzling Ford Explorers off the road. Totally worth it in my book. And you know what fuel efficiency increased on average by %58 in the new cars purchased.
$30,000? Suckers…..
Especially those who pay $30,000 for a brand new Chevy Traverse with steel wheels and PLASTIC WHEEL COVERS.
As long as I have A/C and Cruise Control I’m good. Extras for me are power locks/doors and security system. Although my car has security, my 2nd line of defense is a manual transmission.
Sadly these days it’s only available on either the really expensive car or the base econobox.
A friend of mine had an old Honda Civic that had zero options. I’m not even sure that it had AC and cruise control.
The funny thing is that someone actually stole it and took it for a joy ride. At the time, it was probably 15 years old. Police tried to pull them over for some reason, and the thieves somehow manage to out-run the police on the interstate (banging into the sides of other vehicles during the chase). I’m not sure how that was even possible.
I dont think you can even buy a NEW car anymore without AC, manual transmission and manual door locks and windows
I believe every car comes with AC but not with power windows. We just bought a Ford Fiesta that has manual windows. My daughter thought it was cool since she’d never seen them before.
It’s ridiculous. Saw a commercial for the Scion iQ. The tag line was “Smallest 4 seater ever”
But the price for such an absurdly small vehicle? $16,000!
Strangely- that is probably the cheapest new car available in the US.
I used to drive a Hyundai Accent, which for YEARS you could have found new for $10K. Now a similar model they’re $16-19K.
I had looked at the Scion IQ while looking for a new car- and it does have the MPG going for it, and it’s ridiculously cheap for auto insurance compared to other compacts.
Probably for the highly touted rear window airbag.
If you want a car for cheap, the best option is a Kia Forte, starting at $13400 or a Kia Soul at $13900.
Honda Fit is in the same price range and is a great little hatchback.
Average price? Maybe average MSRP of all models without regard to volume. I have a really hard time believing that that’s an average of selling prices on new cars as most people would understand it.
Methinks this could be because the “Average” person is more often choosing to get leather, navigation systems, sunroofs, etc. Nothing wrong with that if you can afford it. My new Mazda 5 Sport was under $19,000 out the door including tax / tag / title and the base model came with everything I wanted in a vehicle. There are still good values out there for people who want them.
But the average household cannot afford it.
The average household makes only a little more than that in a year.
And this is ONE car.
People buying something they can’t afford comes into play here.
Exactly. There is no such thing as a “stripped” model anymore. I remember shopping for cars with my Dad as a kid, and there was always a couple on the lot that had a radio (no tape), hubcaps, crank windows, no power locks, and a stick shift.
Today that model isn’t even leaving the factory. Even the least expensive cars have six-speed automatic transmissions, power windows, locks, CD players, keyless entry, and other things that used to be options not too long ago. I mean you can get leather in a Honda Civic now.
To me it is just another example of what I call the “luxurification of America”. Probably thanks to the internet and TV, more people think they should be getting what the wealthy have. I use hand bags as the prime example. Louis Vuitton has been around for a while, but I bet if we went back to when my mother was in her very middle class high school in Upstate NY in the 70′s, none of her female classmates were lusting after a designer handbag or shoes. They probably didn’t even know the brands existed. They were luxury items that didn’t exist in her world.
Today even the poorest women think they should have a Fendi and designer shoes, and many use the old credit card to make it happen. Same thing with cars. Sure, I can only afford a Honda Civic, but I’d still like to feel like I am in a 7-series BMW…I want leather and navigation. For many people it is just more of the same stupid we’ve come to expect from our fellow Americans.
The likely explanation is that the 99%-ers are buying fewer cars, while the 1%-ers are buying the same number of cars.
Not to mention the fact that there are new CAFE mileage standards to be met. The money from manufacturing lighter, higher mpg cars is passed on to the consumer. This is not surprising at all.
Along with the CAFE thing, every Government-mandated safety feature over the last 10 years has increased the price of the car. Some of the things are useful, but you are paying for it somewhere.
I don’t feel guilty about buying a new car. I know I’ll keep it forever. My last car I bought new and still have it.
1999 civic ex ran me $16.3K+taxes/fees. The new Subaru Forester I’m really drooling over will run about $23k+taxes/fees. It’ll have at least the same level of accoutrements as the Civic plus AWD.
From one new car to the next, I’m not seeing much inflation over the 13 years.