Have you noticed that new car prices have been on the rise? It’s not just your imagination. In fact, new car prices have increased significantly over the past five years, going well beyond the typical 3% annual growth rate. This upward trend has caused the average list price of a new vehicle to reach $49,302 in July, which is $6,000 more than what it would have been if prices had followed the expected pattern.
According to industry experts like Rebecca Lindland, the senior director of industry data and insights, the current average new car price would have been around $43,000 if it had continued to increase at a rate of 3% each year since 2019. This means that car buyers now need to budget for an additional $6,000 to afford a new vehicle, leading many to turn to auto loans to cover these higher costs.
Market Trends and Forecast
While the past year has seen a shift towards a buyer’s market for cars with an increase in available inventory, finding affordable new cars remains a challenge. Despite a 45.1% year-over-year increase in the inventory of new vehicles, there continues to be a shortage of vehicles priced under $30,000. This trend is evident in the decreasing number of new vehicles listed under $30,000, dropping from 1.1 million units in July 2019 to just 14.7% of the market, or 333,000 units, as of the latest data.
To address this imbalance, the industry would need to introduce over 750,000 sub-$30,000 vehicles to the market to realign prices with consumer demands. However, experts foresee a positive shift in the market, with predictions indicating a potential decrease in new car prices in the coming months.
Tips for Car Buyers
For individuals in the market for a new car, especially those with good credit, the end of summer and beginning of fall present a promising window of opportunity to find better deals. Dealerships are offering increased incentives and discounts, with the average incentive for a new car purchase reaching $3,383 in July, the highest level in over three years.
Keeping an eye out for additional discounts on 2024 models as dealers make room for the incoming 2025 models can help buyers secure better deals. By staying informed about market trends and being flexible in their search, consumers can make the most of these favorable conditions to find a new car at a better price.
Looking for financial assistance to purchase that new car? You can apply for a loan online with us at OxfordWiseFinance.com. Our team of financial and loan experts is here to help you navigate your options and secure the funding you need. Make informed decisions about your car purchase and finance confidently with our support!
