New cars are more expensive than ever before by every measure. Much of the problem is simple supply and demand. Dealerships are low on new cars to sell, raising prices for the ones they have in stock. But the supply is finally beginning to catch up.Demand – prices are skyrocketing In raw dollars, the average new car cost $48,301 in August – a fifth straight month of increases and a record high.
Nearly every other factor influencing new car purchases is also working against new car shoppers. Interest rates are rising. Loan standards are growing more strict. Lenders want higher down payments and higher monthly payments — $743 on average in August. At the average income, Americans would now need to work a record 42.6 weeks to pay off a new car if they had no other expenses. It’s never been this hard to afford a new car. See: Behold, a new car that’s still priced under $20,000Supply – improving, but it doesn’t show The supply side of the problem is beginning to ease. At the end of August, America’s car dealers had 1.23 million new cars in stock, according to Kelley Blue Book parent company Cox Automotive. The last time the figure was that high? June of 2021. Supply is almost a third higher than a year before. But the figure isn’t high enough to bring prices down yet. “Available supply is at its highest level in our data since June 2021,” said Charlie Chesbrough, Cox Automotive senior economist. “Still, it is far below historical levels. Production just cannot catch up to demand yet.” How high does it need to get to bring prices back down to earth? In August of 2020, dealers held 2.48 million cars for sale. In August of 2019 – the last pre-pandemic year – that number was 3. …