The vrooming sound of a car in the backyard is like music to many ears. But what if you have to empty your pockets to hear that sound again?
Yes. Gone are the days when buying a car was easy and owning one was an obvious thing for a typical American family. The rising car prices have made buying a new car a distant dream for many middle-class Americans. According to the latest report, the average monthly payment for a new car has risen to a whopping $777 on average. This has almost doubled from what it was at the end of 2019. And if you are thinking of buying a used car to save money, that is also going to cut your pockets a little more, as used car prices have also jumped up to $544 on average.
But why is this happening? What are the possible reasons behind these rising car prices?
Car prices around the country were quite steady, predominantly till the pandemic hit. As soon as the pandemic phenomenon began to halt the supply chain, car manufacturers confronted a severe shortage of semiconductor chips as well as some other important parts. This was one of the main reasons why car prices soared high during the lockdowns and in the past couple of years.
As soon as the world started opening up post-pandemic, supply chains were restored to normal and car prices were also expected to be, but that isn’t the case now! Of late, automakers have adopted a new mantra—keep inventory clean and price tags fat. Following the mantra, companies are keeping their production in check despite things returning back to normalcy, which is propelling the prices to new heights.
The continuous, rather quick growth of the EV market is also influencing car prices presently. On average, an electric vehicle costs 25% more than a car and the increasing shift to EVs is expected to make the affordability crisis even worse. Besides this, the constantly soaring interest rates are also posing worrying signs for people who are aspiring to buy their dream car soon.
Let’s see how the prices of some popular cars in the U.S. are rising.
|Sr. No.||Name of the Car||Price (2021)||Price (2022)||Price (2023)|
|4.||Jeep Grand Cherokee||$33,885||$38,325||$41,035|
The Problem is everywhere!
After reading the above information, you might think that this issue is only prevalent in the U.S.; but no. Rising car prices have already become a worldwide concern. In Europe, car prices have witnessed record highs. In Japan, used car prices soared last year. The issue is also getting prevalent in China, where EV penetration is higher compared to some other countries.
While we cannot predict when these price hikes will stop, we advise you to think and analyze all the possibilities before buying a new car!