Summary
The average cost of a new vehicle in the United States has nearly reached $50,000, increasing by 30% over the last six years. Rising car prices are largely due to automakers focusing on bigger, more expensive models, along with other economic factors such as high inflation and tariffs. Many consumers are responding by choosing longer loan terms, but this ultimately makes buying a car more expensive due to additional interest costs.
Key Facts
- New vehicles in the U.S. now have an average price close to $50,000.
- Car prices have increased by 30% over the past six years.
- The proportion of cars sold for less than $30,000 has decreased to about 13%.
- Many buyers are choosing 7-year loans, up from nearly 8% to over 12%.
- Longer loans mean higher total costs due to interest payments.
- Automakers have reduced production of smaller, cheaper cars in favor of larger SUVs and trucks.
- The COVID-19 pandemic and supply chain issues have contributed to the rise in car prices.
- Car insurance costs have increased by 55%, and repair costs by 48%, compared to six years ago.
