This may not come as any surprise, but new car prices are very much still on the rise. The average price someone in the U.S. paid for a new car in December 2021 was a staggering $47,077. That means the average price of a new car raised over $6,000 in a single year.
New car prices have been going up for years now, but they’ve never skyrocketed quite like they did in 2021. According to Kelly Blue Book, the average price of a new car in 2019 rose by $1,799 compared to 2018. Then, in 2020, the price rose again by $3,301. If that wasn’t bad enough, the average price paid in 2021 rose by another $6,220. That means since 2018, the average price paid by people in the U.S. for a new car rose by nearly $10,000.
The reason for the increase? You guessed it: Reduced supply and increased demand brought on by the pandemic.
All new auto production was halted for months, and a worldwide microchip shortage hit in the middle of 2021, just as the economy was beginning to recover. People in the U.S. were beginning to spend again, and many decided to spend the extra cash in their pockets on a new car. The only issue was that manufacturers couldn’t get the microprocessors they needed to keep up with customer demand. Dealer incentives also remained at a 5-year low — meaning most would sell new cars at or above MSRP.
From the KBB article:
“December typically is the best month for luxury vehicle sales, and 2021 followed that trend in a big way,” a Cox Automotive analyst said. “The result was another record in overall average transaction prices, completely driven in December by the increase in luxury vehicle sales.”
Another factor leading to the increase in prices? More people in the U.S. buying luxury cars than usual.
The average price for non-luxury vehicles in December was a tick over $43,000 — which is more than $900 over the sticker price. Meanwhile, the average luxury car buyer spent nearly $65,000 on new vehicles — more than $1,300 above sticker.
Car buyers didn’t find much release on the used car market, either. The average price of a used car was over $29,000 according to Edmunds.
It’s still anyone’s guess as to when these sky-high prices will come back down to earth. In the meantime, you better start saving if you’re looking for a vehicle.