The average car becomes less affordable for the average person, with typical monthly payments reaching all-time highs.
According to a report by Cox Automotive and Moody’s Analytics, the price of new cars continued to rise in May for the fourth month in a row, with monthly car payments averaging $ 712 per month.
“Unfortunately for the part of the population that probably needs it most, it becomes more and more out of reach,” Ivan Drury, senior manager for insights at car buying expert Edmunds, told NPR about the difficulty of buying a car.
Data from the consumer price index from May showed that over the last 1[ads1]2 months, the prices of new cars have risen 12.6%, this and rising interest rates have made monthly payments higher than ever.
Used cars have increased even more with an increase of 16.1%.
USED CAR PRICES STILL CLIMB AS GAS PRICES, SUPPLY CHANGE FOR SUPPLY CHAIN INCREASES DEMAND
According to the Kelly Blue Book, the average purchase price of a new car in May was $ 47,148.
“I joke with people that every new car purchase is a luxury car purchase, I do not care what you buy,” Drury told NPR.
BUYERS WITH HUGE INCOME PRICED OUT OF THE NEW VEHICLE MARKET
The report from Cox and Moody’s said May had a median of 41.3 weeks of income needed to buy an average new car.
An important reason for the price increases is the ongoing lack of computer chips that run many important functions in modern vehicles. According to Cox Automotive’s Rebecca Rydzewski, it may not get much worse, but there are no signs that they will get better in the first place.
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“Prices for both new and used cars are showing signs of stabilizing, and inflation is likely to slow down during the summer as the anniversary of the ‘big squeeze’ in stock crossings,” Rydzewski said in a statement included in a June Cox report. “However, no one should expect a fall in prices, as tight supplies in the new market will keep prices at an elevated level into 2023.”