Long gone are the days of cheap new cars. On the list of new cars that are no longer affordable, the Jeep Cherokee sport utility vehicle came in first place. New cars, trucks, and SUVs are less affordable than ever, with the national affordable new car price up 29% since 2019.
The Jeep Cherokee starts the list of new cars that are no longer affordable
Car affordability was one of the main focuses of a new iSeeCars study. Since August 2019, new car affordability has decreased by 13.3%. Used car affordability decreased by 26.7% at that same time. The Jeep Cherokee SUV is in the top spot for new cars that are no longer affordable. Back in August 2019, a new Cherokee would have been around $29,316. In August 2022, that same new Jeep Cherokee would cost $39,030.
The Cherokee, along with the Nissan Frontier pickup truck, Chrysler 300 sedan, and Kia Sorento SUV, were considered affordable new cars in 2019 but not in 2022. Various issues have impacted the prices of vehicles, such as the semiconductor chip shortage and pandemic-related issues.
Using the Car Affordability Index, iSeeCars analyzed new and used car affordability in the last three years. “Due to supply chain shortages and increased demand, the rising prices of new and used cars have outpaced income growth,” iSeeCars Executive Analyst Karl Brauer said.
The iSeeCars Car Affordability Index found more new cars that are no longer affordable
Brauer says that between August 2019 and August 2022, new car prices increased by about 29%. Three-year-old used car prices went up 52%, but incomes only went up 13%. People still need cars to get around, so shoppers have more difficulty paying for this necessity.
The iSeeCars Car Affordability Index “compares median household income to an idealized income for financing a car.” If the score is 100, that means an income equals the “idealized income for a car purchase.” Using this index, the iSeeCars Car Affordability Index showed an average value of 88.8% through 2019. In 2020, that dropped to 85.1% and down to 84.3% in 2021. Now in 2022, that number dropped even more to 79.1%.
A new Kia Sorento would have cost $30,476 back in 2019, but that number jumped to $39,570 for a new 2022 Kia Sorento. For the Chrysler 300, buyers could get a brand-new version for $30,146. These days, the average price is $39,767. These new cars that are no longer affordable might have been a budget-friendly option for some people who are now priced out of the segment.
Hopefully, prices for new and used vehicles will be coming down
A Nissan Frontier would have been around $27,146 in 2019, but iSeeCars says a new version in 2022 would cost $39,833. The average new car price in 2019 was $32,702, now $36,221 in 2022.
Brauer says, “The Jeep Cherokee and the Nissan Frontier had relatively low demand in their segments, but a lack of new car inventory raised the demand for these previously slow-selling vehicles.” Evidence points to prices continuing to fall over the next few months, but the automotive industry is volatile just like any of industry.