Drivers Are Paying More For Cars Than Ever Before

Interested in a new set of wheels? Chances are you’re in for a long, nightmarish experience. Not only will it require more research on your part, but you’ll also end up paying more. A lot more.

New car inventory is scarce. The used car market is up in shambles. And if that wasn’t bad enough, now select automakers are implementing car subscriptions for basic functions like heated seating and Apple CarPlay.

For the sake of being real, we won’t sugarcoat any aspect of the automotive market nor hide the fact that automakers are really taking advantage of consumers. Plain and simple, it sucks to be a car buyer nowadays.

But what’s really going on?

Though we’d gladly rewind the clock back to 2019, a time when affordable gas prices and pre-pandemic sales were a thing, the truth is the automotive market has reached this point for a number of reasons.

The blame game might be easy, but now the biggest concern is things just keep getting worse. A whole lot worse. Consumers have really begun to feel the impact this summer, which is why we’ll simplify the situation for buyers below.

Why are car prices so high right now?

The answer to this question is rooted in thing that changed everything: the COVID-19 pandemic. Frankly, it took us all by storm. From every household to every industry, the pandemic continues to have a day-to-day impact on how we operate.

However, years later since its first emergence, some industries have struggled to adapt. The automotive industry is one of the biggest. In a nutshell, the real problem has stemmed from the global microchip shortage. Essentially, those are the teeny tiny parts that are instrumental in the everyday functions of your car.

Think navigation systems, voice controls, and window motor controls. Basically any feature that you use on a day-to-day basis in your car. Because of the chip shortage, which is a direct result of cutting back orders early on in the pandemic, automakers have been scrambling to get back to normal.

Fewer vehicles to produce meant car makers could start charging more. Despite having low inventories, most manufactures racked in exceptional revenues in the last year. On top of that, they quickly found out that many consumers would keep buying even if enticing offers or holiday sales were off the table.

Consumers are paying more, begrudgingly

The high MSRPs are an easy solution for automakers. How else would they make up for the limited output? But sad to say, this new world of automotive shopping is not only a turn off for buyers, but a scary look into the future. If things keep heading in the same direction, we could see thousands of drivers start to ditch their vehicles for alternative forms of transportation.

The ways things are now, consumers are paying the price, pun intended.

Is it better to buy used?

Not exactly. In fact, you may want to hold off on car buying altogether. With new car costs reaching exorbitant rates this year, many shoppers have turned to the used car market for answers. Unfortunately, a “good deal” is far and few between. As mentioned earlier, the used car market has become chaotic.

According to the Bureau of Labor Statistics, the average used car price jumped a whooping 16% in one year. That means some used cars are going for rates that are more comparable to pre-pandemic new car shopping. Apart from being ridiculously expensive, the used car market is highly competitive.

If you find a car you like, it’s best to act fast. Now that a lot of used car inventory is found online, buyers have the convenience of trading in their vehicle for something new in a few minutes. Even so, the used car market has become the more reliable source for shopper in recent months.

Is it worth paying more?

If you’re desperate for a new vehicle, we totally get it. For many consumers, a car is not merely an asset, it’s a necessity. It’s how you get to and from work, visit friends and family, and spend most of your time when you’re away from home.

But does that mean it’s really worth paying more? Not really. Whether you agree to disagree, the fact of the matter is a car is a depreciating asset. Paying more is only insult to injury. If you have the option to delay your car purchase for two years or more, we definitely recommend doing so.

With a looming recession, rising insurance rates, and absurd gas costs, car ownership has become a dreadful venture for the everyday driver. It’s likely consumers will continue to face the burden of paying more until inventories even out or automakers reach target productions.

That said, will carmakers continue to take advantage of consumers who are willing to pay more? That we can’t know for sure. What do you think of the current market situation? Tell us your opinion about paying more below.