The average new car sells for $48,000, but buyers just want to spend money

Car buyers returning to dealerships for the first time since before the pandemic were hit hard. Nearly half of those budgets cost less than $35,000, which was the average price of a new car in 2018. The problem is, while the average cost of a new car has dropped over the past 24 months, it’s still a whopping $47,716.

researcher edmonds Revealing a huge disconnect between customer expectations and the unpleasant reality they encounter inside dealer showrooms. In some cases, the gap is even wider. While 48% of respondents said they were willing to spend $35,000 or less, 14% said they were willing to spend no more than $20,000. but edmonds Data shows that there were almost no buyers taking home a new car for less than $20,000 in July.

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Like all goods, cars have become more expensive over the years due to inflation (although $35,000, adjusted for inflation, is $44,000, not $48,000). But that’s not all that’s changed in buying a new car over the past six years. In 2018, car buyers enjoyed incredibly low interest rates, which made loans more affordable, and dealers offered plenty of incentives so trade prices were often well below MSRP. But by 2024, incentives will be harder to obtain – although they are gradually returning – and interest rates will be much higher.

More than 73% edmonds Respondents said they had put off buying a new car because of high prices, with more than 62% saying they had put off buying because of unfavorable interest rates. Three-quarters of drivers said they would not accept an interest rate higher than 6%, but 60% of buyers financed at annual rates of 4% to 9%, with the average interest rate for all cars purchased in July being 7.1%. edmonds explain.

It’s a similar story in the used car market, with 27% of drivers saying they expect to spend $10,000 or less, but only 5% of used cars actually change hands in this price range.

How will buyers bridge this gap? Some people will continue to put off buying a new car, but 54% said they plan to work more hours or get an extra job to afford a car.