If you’re currently on the market for a new vehicle, you might’ve noticed that prices are significantly higher than they were before. In fact, the average new-car price hit the mark of $41,044 in July of 2021 jumping 17% from the year prior. Let’s dive into some of the factors that have led to this increase in new vehicle prices.
The Shift to Larger Vehicles
One contributing factor to the increase in new car prices is the shift of focus to larger vehicles from consumers. Automakers like Toyota, Hyundai, Kia, Subaru, and Mazda all reported an increase in large vehicle sales like SUVs and trucks compared to the sales of their sedans and smaller offerings which saw a decline. This trend seems like it will continue into the future as the preference for larger, more versatile vehicles grows.
That versatility seems to be the key in this shift for the market and with that, consumers are willing to pay more. Larger vehicles allow for less worry about passenger and cargo space. SUVs and trucks let owners take part in a larger variety of activities like going to the store, going on a weekend trip, going off-road, and more without having to change much (if anything at all) about their vehicle. These vehicles are also getting more efficient as the push away from fossil fuels grows. Another advantage of larger vehicles is accessibility. It’s often easier for an older person to get into and out of a tall SUV than a low-slung sedan or crossover.
More Standard Safety Features
As vehicles progress with each iteration, so do the safety features that come standard on them. These features include things like forward collision warning, adaptive headlights, blind-spot detection, lane departure warning, and backup cameras. All the cameras and sensors needed to make vehicles safer also drive up costs. If you’re looking for even more safety features, there are many available that can be optioned out or seen in higher trims. When choosing a vehicle that gives you confidence in reaching your destination safely, it is important to distinguish between essential features and the nice-to-haves. This is especially the case if you’re focused on getting the most for what you’re willing to spend on a new vehicle.
Supply and Demand
It’s no secret that there is currently a shortage in vehicle inventory. Why does that matter? This means that there are more consumers trying to get into vehicles than there are vehicles available. The problem that arises from this is that it takes more for any buyer to get the vehicle they want. That usually translates into a higher transaction price for a given vehicle than before.
The resulting higher price not only applies to new vehicles but is also affecting the prices of pre-owned vehicles. Another effect of the lack of supply is reduced incentives from manufacturers on new vehicles. During the time this article is being written, the main contributing factor to the lack of inventory for many dealerships is the chip shortage. If you’d like to learn more about how the chip shortage is affecting the automotive industry, check out this BestRide article.
If you’re truly in need of a new vehicle as soon as possible, keeping these things in mind might help in relieving some frustration that can come with today’s market conditions. The best way to find the best value doing your research. Our Buyer’s Guides are a great resource for evaluating what’s on the market. Once you know what you want, you can search the exact vehicle with the features and price range you’re looking for right here on BestRide!