Why Are Cars So Expensive?
Nowadays, if you find yourself in the market for a new car, you may be experiencing some sticker shock.
You may even be thinking to yourself, “have new cars always been this expensive?” While the question is multi-layered in many ways, the simple answer is no. According to Kelley Blue Book’s last published results, the average price for a new car had risen to an all-time high of $38,948 in December of 2019.
We have also witnessed a meteoric rise in auto loans in recent years. According to Experian, the average auto loan in the second quarter of 2019 was $32,119, representing a year-over-year increase of $1,161. While some of this price increase is driven by inflation and higher equipment costs, those factors alone don’t fully explain why a new car costs more today than the yearly salary of the average American.
So why are cars so expensive? To answer this question with any sense of depth, we must consider several overlapping factors. Let’s look at each of them and get to the bottom of why cars are so expensive these days.