Brakes slammed on buyers
Only privileged few can afford new cars
Juan David Ramirez knows his 2012 Nissan Juke SL is on its last legs. But buying a car in the Orlando area these days reminds him of car buying in his home country in Colombia, where only the wealthy can afford new cars.
Ramirez, 33, and his wife, Angelica Castro-Calle, really want a new, small SUV with a little space for camping and paddleboarding gear. But despite good jobs in finance and business contracting, the couple’s monthly loan payment would run around $700 for the $35,000 models they are looking at, before dealer markups.
So they plan to patch up the Nissan, which is paid off. He blames the manufacturers and dealers.
‘‘They’re going to price out a certain segment of the market and of the demographic,’’ Ramirez said. ‘‘But that’s something they’re probably OK with.’’
Even as inflation is easing and global chip supply shortages are beginning to resolve, more Americans are being priced out of the nation’s new car market, industry and government data suggests. Spending on new cars by the lowest 20 percent of earners dropped to its lowest level in 11 years. Meanwhile, spending on new cars by the top 20 percent reached its highest level on record, going back to 1984, according to the most recent data from the 2021 Consumer Expenditure Survey, not adjusted for inflation.
The problems pushing new cars out of reach are twofold. On the demand side, rising interest rates have made car loans far more costly — the average monthly payment reached $686 in mid-2022, according to data from Edmunds. Last month, it hit $730.
But even if shoppers can snag a decent interest rate, the supply of cars available for purchase has been trending far more expensive, in part because manufacturers have been funneling resources into souped-up versions of pricey models and cutting back on cheaper options.
In April, General Motors said it would scrap production of its top-selling electric vehicle, the Chevy Bolt, wiping out one of the most affordable EVs in the United States by the end of the year. That continues a trend. In 2017, for example, there were 11 models available on the US market for less than $20,000, according to Cox data. By March 2023, there were only 2.
The end result is a widening gap between those who can afford new cars and those who can’t. The average price of a new car in the United States hit $48,008 in March, up 30 percent from March 2020, Kelley Blue Book said.