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If you haven’t bought a new car since before the pandemic, you might be shocked by the prices now. In October, the average price for a new car in the U.S. was $47,612, according to Edmunds. This is almost $10,000 more than in 2019, before the pandemic.
Why Are Cars So Expensive?
Several reasons explain why car prices have gone up so much:
- Pandemic Disruptions: COVID-19 caused supply chain issues, making essential car parts harder to get.
- Bigger Cars, More Features: Buyers now prefer SUVs and trucks with advanced features like automatic braking and adaptive cruise control, which make cars more expensive.
- Focus on Expensive Models: Automakers like Ford and GM have stopped making cheaper cars, focusing on high-priced SUVs and pickups instead.
What Options Are Left?
Affordable cars are mostly from foreign brands. For example, Nissan’s average car price is $35,362, including its luxury Infiniti line. In comparison, American automakers like Ford and GM have average prices over $50,000.
Electric Cars and Hybrids
The growing popularity of electric vehicles (EVs) and hybrids also adds to the cost. These cars are more expensive than gas-powered cars but are becoming more common.
High Loan Payments
Car buyers are also paying more in interest. The average interest rate for car loans was 7% in October, increasing the average monthly payment to $742. As rates decrease, buyers might spend more on premium features, pushing prices higher.
What’s Ahead?
If tariffs are placed on imported cars or parts, prices could rise even more. Many cheaper models and parts are made overseas. Automakers are unlikely to absorb these costs, meaning buyers will pay the difference.
PrudentJ2 reports this development as car prices continue to rise.
