We know that both shortages and inflation are hitting Americans in the pocketbook, and recently published data confirms that the auto industry is still running hotter than ever – at the expense of the average buyer.
Moody’s Analytics says that the average monthly car payment in the U.S. just hit a record high of $712 – and there are a lot of factors in play.
Moody’s, using Cox Automotive data, says that high demand and low supply has discouraged incentives from manufacturers and dealers, leading to high purchase prices. How high? The firm says vehicles are 26 percent more expensive than before the pandemic and 19 percent more expensive than this time last year. Specifically, in May, new vehicle prices averaged $47,148 and used vehicles were still up 40 percent from pre-pandemic figures.
But despite the average new vehicle price sitting at its second highest recorded sum, there are other variables adding to the ballooning payments: interest rates. And as the Fed continues to add basis points to tame inflation, these will continue to ramp up and add to the monthly strain.
But the report goes on to stress that while cost increases are everywhere, the demand for luxury vehicles is also weighing against the average with these buyers paying an average of $1,071 above sticker price.
And that’s not the only number going up. So are loan delinquencies, according to Ford CFO, John Lawler, as reported by Automotive News.
Is there any end in sight? Moody’s thinks so, but the consensus seems to vary. As Jalopnik points out in a recent follow up report, automakers may not have an incentive to go back to business as usual.