The world is getting pretty funny. “Post” COVID life has proven to be most strange. We are facing shortages in a wide range of goods, insane house prices, and car prices have shot through the roof of sanity like Willy Wonka’s elevator. What the hell is happening? Let’s take a closer look at car prices. What is the average price of a car in 2022?
What is the average price of a new car?
Kelly Blue Book reports that the average price of a new car as of May 2022 was a searing $46,526. Of course, this number undulates with each new model and price shift. The broader point is that the average new car costs nearly $50,000. How did we get here?
Even since May, prices have continued to go up. Joinyaa.com says June prices rose 1.9% ($895) from May and were up 12.7% ($5,410) from June 2021.
If you zoom out over the past 10 years, it gets even crazier. In 2012, the average new car price was $31,000. This means that in 10 years, the average cost of a new car has risen by 54 percent.
This whole thing goes from unfortunate to downright cruel because we are paying more than MSRP for these already inflated prices due to the pandemic and inventory shortages.
“For nearly a year now, we’ve seen new vehicles transacting above suggested retail prices,” said Rebecca Rydzewski, research manager of economic and industry insights for Cox Automotive. “High prices, a lack of inventory, few incentives – the market is changing, pushing many would-be buyers to the sidelines and forcing others to order from future stock and wait. We expect new-vehicle affordability will be a challenge for the foreseeable future.”
What is the average price of a used car?
I grew up in a conservative southern family that never dreamed of buying a new car. We are used-car people. However, in this insane bizarro world, we find ourselves in, used car prices are even worse than new ones.
The average price of a used car set a new record last December. However, since then, used car prices have technically come a touch, but not much. As of May 2022, the average used car price was $28,312. Not only is this far more than I’ve ever spent on a car, but it’s also more than many Americans have spent on a car, and that’s now the average.
The true insanity comes into play if you look at used models of the most popular new cars that are short of production. We have seen slightly used cars trading for more than MSRP on a new one. We are looking at you, Ford Bronco and Bronco Sport.
Will cars get cheaper?
It’s hard to say at this point. Theoretically, if semiconductor chip production gets back on track and the major OEMs can catch up on orders, then at least used car prices should come down. However, there are many examples of products getting much cheaper once customers show they’ll still buy with inflated prices.
The car market is a mess. While no one can see into the future, something will have to give. Between the prices of housing, gas, food, and cars, most Americans won’t be able to shoulder these prices much longer.