{"id":3947,"date":"2023-12-04T17:18:52","date_gmt":"2023-12-04T23:18:52","guid":{"rendered":"https:\/\/going-places.thegeneral.com\/new-vehicle-costs-are-tempering\/"},"modified":"2025-08-27T10:09:19","modified_gmt":"2025-08-27T15:09:19","slug":"new-vehicle-costs-are-tempering","status":"publish","type":"post","link":"https:\/\/www.thegeneral.com\/going-places\/blog\/car-and-driving-basics\/new-vehicle-costs-are-tempering\/","title":{"rendered":"New Vehicle Costs Are Tempering but Remain High Relative to Income"},"content":{"rendered":"\n<p><span style=\"font-weight: 400;\">Buying a new vehicle has become much more expensive since the COVID-19 pandemic threw a wrench into automotive manufacturers&#8217; supply chains. New vehicle prices have been rising at the fastest clip in recorded history since the spring of 2021.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">That rapid rise in costs began to slow, finally, this year. But that doesn&#8217;t mean buying a new vehicle is getting cheaper\u2014it&#8217;s just not getting more expensive as quickly as it has been for the last several years.<\/span><\/p>\n\n\n\n<p><a href=\"https:\/\/www.thegeneral.com\"><span style=\"font-weight: 400;\">The General<\/span><\/a><span style=\"font-weight: 400;\"> used data from<\/span><a href=\"https:\/\/www.coxautoinc.com\/market-insights\/september-2023-vai\/\"> <span style=\"font-weight: 400;\">Cox Automotive and Moody&#8217;s Analytics<\/span><\/a><span style=\"font-weight: 400;\"> to examine new vehicle affordability for American consumers. The index considers actual sale prices after any discounts or negotiations rather than simply the MSRP. It also factors in a 10% down payment plus interest and assumes a 72-month term for financing.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">From 2012-2019, an American household earning the median income could purchase a new vehicle with the equivalent of about eight months of income. Today, buying a new car requires closer to 9.5 months&#8217; worth of income.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">This represents a shift that&#8217;s happened in just three years whereby new vehicles have moved further out of reach for the typical American family thanks to a combination of rising prices for vehicles and higher costs to borrow money.<\/span><\/p>\n\n\n\n<p><b>QUICKLY FILE YOUR SR-22<\/b><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">Learn how you can get back on the road after a driving offense with a free <\/span><span style=\"color: #339966;\"><a style=\"color: #339966;\" href=\"https:\/\/www.thegeneral.com\/car-insurance\/basics\/sr22\/\"><span style=\"font-weight: 400;\">SR22 insurance<\/span><\/a><\/span><span style=\"font-weight: 400;\"> quote.<\/span><\/p>\n\n\n\n<figure class=\"wp-block-image aligncenter is-resized\"><img decoding=\"async\" src=\"https:\/\/www.thegeneral.com\/going-places\/wp-content\/uploads\/2024\/11\/New-Vehicle-Affordability-is-Improving-from-Last-Year.png\" alt=\"New Vehicle Affordability is Improving from Last Year\" class=\"wp-image-4542\" style=\"width:630px\"\/><\/figure>\n\n\n\n<p><span style=\"color: #ff0000;\"><strong><\/strong><\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-the-cost-of-purchasing-a-new-vehicle-relative-to-income-is-falling-from-a-decade-high\"><b>The Cost of Purchasing a New Vehicle Relative to Income is Falling from a Decade High<\/b><\/h2>\n\n\n\n<p><span style=\"font-weight: 400;\">Throughout the 2010s, the cost of purchasing a new vehicle remained relatively stable for American households, rising cyclically around the end of each year. However, the pandemic created a disruption in the vehicle manufacturing industry that would reverberate for years.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">The first year of the pandemic kept Americans at home, attempting to avoid the worst outcomes of the little-understood COVID-19 disease spreading through the country. By spring 2021, however, Americans were able to get early vaccines, allowing them to hit the roads again to return to workplaces, visit family, and travel for leisure to places where leisure industries were still operating.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">The uptick in mobility that year meant Americans needed cars again, and<\/span><a href=\"https:\/\/fred.stlouisfed.org\/series\/TOTALSA\"> <span style=\"font-weight: 400;\">demand for vehicles shot back up<\/span><\/a><span style=\"font-weight: 400;\"> to what was typical. But manufacturers weren&#8217;t ready. Not only had their assembly plants been shut down sporadically as infections spread through them, but a shortage of computer chips hampered production levels. The mismatch between demand and availability of new vehicles meant dealerships and manufacturers could charge more.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">That trend propelled the prices for new vehicles to record highs before<\/span><a href=\"https:\/\/fred.stlouisfed.org\/series\/CUSR0000SETA01\"> <span style=\"font-weight: 400;\">plateauing this spring<\/span><\/a><span style=\"font-weight: 400;\">. In November, the number of unsold new vehicles on lots rose 62% over the same time in 2022.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">&#8220;The supply issues that started in 2021 appear to have passed as most brands have seen their availability improve substantially,&#8221; Cox Automotive senior economist Charlie Chesbrough<\/span><a href=\"https:\/\/www.coxautoinc.com\/market-insights\/new-vehicle-inventory-october-2023\/\"> <span style=\"font-weight: 400;\">said in a statement<\/span><\/a><span style=\"font-weight: 400;\"> this month.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">But even as more vehicles are available, fewer Americans are buying in the face of higher interest rates for car loans. Sales have been weaker, contributing to a decline in prices that could continue into the holiday months.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">&#8220;As we enter the holiday sales season, greater discounting from the automakers seems likely,&#8221; Chesbrough said.<\/span><\/p>\n\n\n\n<p><b>COMMITMENT-FREE CAR INSURANCE QUOTES<\/b><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">In two minutes or less, you can get free, no-commitment <\/span><span style=\"text-decoration: underline;\"><span style=\"color: #339966; text-decoration: underline;\"><a style=\"color: #339966; text-decoration: underline;\" href=\"https:\/\/www.thegeneral.com\/quote\/\"><span style=\"font-weight: 400;\">car insurance quotes<\/span><\/a><\/span><\/span><span style=\"font-weight: 400;\"> without speaking to a representative.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">Written by: Dom DiFurio, Data Work By Emma Rubin, Story editing by Ashleigh Graf, Copy editing by Tim Bruns.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The General used data from Cox Automotive and Moody&#8217;s Analytics to examine new vehicle affordability over the last decade for American consumers.<\/p>\n","protected":false},"author":7,"featured_media":3948,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[55],"tags":[],"class_list":["post-3947","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-car-and-driving-basics"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.5 (Yoast SEO v27.5) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>New Vehicle Costs Are Tempering but Remain High Relative to Income<\/title>\n<meta name=\"description\" content=\"The General used data from Cox Automotive and Moody&#039;s Analytics to examine 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