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Car prices show that now is one of the worst times to buy




(CNN) It has almost never been as difficult to buy a new or used car in the US as it is today, despite improving supply issues and inflation starting to stabilize.

Vehicle transaction prices — the price you actually end up paying after any dealer discounts or markups — have climbed higher and faster since 2020 than at any point in more than 35 years, according to recent data from the Bureau of Labor Statistics.

The consumer price indices for both new and used cars – average changes in vehicle transaction prices over time – are much higher than they were four years ago in 201[ads1]9.

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There is a silver lining. BLS data shows that used car inflation has cooled as dramatically since December 2022 as it rose in the months before that. But used cars have a long way to go before they approach 2019 sales prices, and new car prices have yet to slow down.

The average transaction price of a new car has risen nearly $12,000 over the past five years, according to data from the auto website Edmunds.com. For used cars, the average transaction price is still nearly $9,000 higher than it was in February 2018.

“[Prices are] coming down a little bit, but not nearly as fast as one would hope,” said Ivan Drury, director of insight at Edmunds.com. “If you look back, or if you’ve ever done a transaction before in your life. , all these numbers are bad.”

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Car buyers haven’t seen price increases like these since the 1970s and 80s. What makes the 2020s unique is how much car prices rose in a short time. During the used car market’s worst 12 months of the pandemic, the index rose by 45%. There has never been a 12-month period since the BLS began keeping records in 1947 when used car prices have risen more.

Recent trends in prices have been similar across regions of the United States, but in some areas starting prices may be higher than others. Preferences for more expensive vehicles in some areas drive these regional differences, Drury said.

There’s a big market for pickups and SUVs in the South, he said, where BLS data shows new car transaction prices have risen the most since 1987.

The average price of a large pickup truck nationwide was $62,430 in 2022, according to Edmunds.com. The average midsize car price was just $31,381.

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The road to more reasonable prices for new and used cars is still full of potholes.

Consumer tastes have shifted towards larger and more expensive pickups and SUVs. New car buyers are loading up on options, compared to more stripped-down models available a few years ago. Both of these trends drive up prices and also create incentive for automakers to produce more expensive rides. The used market continues to be affected by the decline in lease exchange and rental car companies competing with consumers for the same limited supply of three to five year old vehicles.

“We have a couple of things that are really hindering the U.S. market,” Drury said. “I don’t see them going away anytime soon.”



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