Average Vehicle Price June 2022 = $45844

I wonder how much of this increase is due to the fact that manufacturers have only been shipping the high end, fully optioned models because of the chip shortage. If there are no base models available it skews the numbers. Also with interest rate increases home prices will decrease and people wont be able to get home equity loans because there just wont be equity there which will start to put downward pressure on the car market too.
Most people don’t want base model vehicles. When I went to buy my truck they were absolutely floored I wanted a Tradesman and asked me no less than 5 times if I’m sure I want to “give up” my leather seats, 8.4” touch screen radio, panoramic sunroof, etc I had in my Chrysler 300. If base models sold well, they’d be stocked. Especially in an era of chip shortages.
 
Most people don’t want base model vehicles. When I went to buy my truck they were absolutely floored I wanted a Tradesman and asked me no less than 5 times if I’m sure I want to “give up” my leather seats, 8.4” touch screen radio, panoramic sunroof, etc I had in my Chrysler 300. If base models sold well, they’d be stocked. Especially in an era of chip shortages.
Plenty of people want base model vehicles. If their supply is limited, and there's not enough chips and consequently new vehicles to go around, why would they use their limited supply on vehicles that have a lower profit margin?

Manufacturers know there's more demand than supply, so they focus their efforts on the vehicles that generate the greatest profits-- mid-tier and up vehicles. If enough people are buying them, that's what they're going to focus on. At the end of the day their primary interest is profits/making money. And highly optioned vehicles generate more of it, so long as there's people out there to buy them.

If they did a complete 180 and started making and marketing nothing but base models, they would still sell.
 
That's cool and all. But I think he's referring to people rolling over mortgage debt (home equity loan / cash out) to but a new car they don't really need, which keeps people in a debt cycle. IMO the reason to finance a home is to pay it off eventually, but a lot of people use it as a cash cow, and our economy (especially new car sales) depends on that. Watch what happens to the new car market now that mortgage interest rates have topped 5-6% and refinances start to dry up. And we're nowhere near the peak IMO, and the government knows it-- that's why recession indicator flags are flying nice and high.

Our economy in this country is like a giant game of Jenga. 70% of it is based on consumption / consumer spending. You take a couple of the blocks out in the right places, like easy access to money, and a whole section of the population that's been scraping by is now indebted and their ability to consume and spend is greatly diminished.
Because of the run up of real estate prices in Utah-I currently have MAJOR EQUITY (I probably can't spend it all-without a real effort). Do I take out the equity to buy a new car? Take out a regular car loan? OR $$$ leave it to my kids? I don't think any of us have a right to tell others what to do with home equity.
 
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Plenty of people want base model vehicles. If their supply is limited, and there's not enough chips and consequently new vehicles to go around, why would they use their limited supply on vehicles that have a lower profit margin?

Manufacturers know there's more demand than supply, so they focus their efforts on the vehicles that generate the greatest profits-- mid-tier and up vehicles. If enough people are buying them, that's what they're going to focus on. At the end of the day their primary interest is profits/making money. And highly optioned vehicles generate more of it, so long as there's people out there to buy them.

If they did a complete 180 and started making and marketing nothing but base models, they would still sell.
Statistics show this isn't the case. In a normal market people buy cars with options. Yes-car loans are longer and they are keeping cars longer-they want them to be nice places for the next 10 years or so.
 
Plenty of people want base model vehicles. If their supply is limited, and there's not enough chips and consequently new vehicles to go around, why would they use their limited supply on vehicles that have a lower profit margin?

Manufacturers know there's more demand than supply, so they focus their efforts on the vehicles that generate the greatest profits-- mid-tier and up vehicles. If enough people are buying them, that's what they're going to focus on. At the end of the day their primary interest is profits/making money. And highly optioned vehicles generate more of it, so long as there's people out there to buy them.

If they did a complete 180 and started making and marketing nothing but base models, they would still sell.
But they’re still a small minority of new car buyers. Even before the current craziness lots would have just a few true base models, everything else was mid trim and higher. Even my base model Ram has $5,000 in options, and they had none that didn’t have at least cloth seats, carpeted flooring, and chrome bumpers on the lot.
 
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How do I impress the neighbors and friends with a Honda Accord? A Mercedes will make me appear cool.
Will a $106,000 Jeep Grand Wagoneer Obsidian make you look even cooler? (The cheapest Wagoneer is "only" $87,000)

 
Will a $106,000 Jeep Grand Wagoneer Obsidian make you look even cooler? (The cheapest Wagoneer is "only" $87,000)


Would certainly haul a lot more people and cargo than an Accord. Guess it just depends on your needs.
 
I'm in extremely casual shopping mode with an eye to replacing my 2 Series; if I see something I really like priced within my budget, I'll buy it.
Otherwise, I'll wait.
 
I'm in extremely casual shopping mode with an eye to replacing my 2 Series; if I see something I really like priced within my budget, I'll buy it.
Otherwise, I'll wait.
What ever you do, don't test drive a Tesla Model 3. I did and look what happened - had to have one.

This is the first auto I've apparently made money on. Was offered $8,000 (all cash, not a trade-in) more than I paid for my '21 last week.
 
With 72 and 84 month financing, lets see how high it can go.... Waiting to see 96 month car mortgage commercials soon. The 120 month finance is already here. So many clueless make eternal monthlies. So sad they don't have a financial clue. Gotta keep up with the Joneses.
 
With 72 and 84 month financing, lets see how high it can go.... Waiting to see 96 month car mortgage commercials soon. The 120 month finance is already here. So many clueless make eternal monthlies. So sad they don't have a financial clue. Gotta keep up with the Joneses.

That's financial insanity. These people are never going to get ahead. Huge loans on expensive depreciating assets will kill off any chance for financial gain, quicker than anything else. You'll never get ahead paying everyone interest.... Especially if you're not collecting any.

Add in massive credit card debt, and pile on a big home mortgage, and you have a disaster in the making. We've shifted from a society who forgets what they need, to one that is only concerned with what they want.

Salt it all over with a big recession and it can create a financial situation that can easily lead to bankruptcy.
 
The downside of extended loans is it allows more cars to be sold at higher and higher MSRP. It is akin but not as bad as the accessible student loans which spiked university costs because they could charge more.
 
What ever you do, don't test drive a Tesla Model 3. I did and look what happened - had to have one.

This is the first auto I've apparently made money on. Was offered $8,000 (all cash, not a trade-in) more than I paid for my '21 last week.
Did you actually sell it then? Or is your "made money on" in theory?
 
Until we hit a period of deflation it’s not going to get better. Wait for the bubbles to pop. Cars are like houses right now - unless you absolutely need it right now, just stay away. I think car bubble may last longer than housing because people are heavy into real estate investing so there is excess inventory out there that will be unloaded once the bottom drops, but cars not so much. So I expect car bubble to last longer as they’re also being more heavily impacted by supply chain bottlenecks. Sub $10k cars likely won’t budge in price (or go up), but expensive new cars will likely feel the pressure from higher interest rates.
 
A bit of confirmation bias, but I can't help noticing quite a few brand new car dealerships popping up or moving to brand new still-under-construction locations within 5 miles of me. Dealerships can't be hurting that bad (at least by me.)
 
We have come up a couple grand over past few years. I used to try to stay below 15 last new car two year ago was 17K thanks to hefty rebates and old stock. Not bad at all for a AWD Automatic. The wife stretched to 26K for a Subaru Outback Base, bc the dealer wasn't discounting the Crosstrek. so the two cars were within 2k of each other.

Average price is pretty useless data for me I would prefer to see the Mode+Median/2 not the Mean to digest the most frequent transaction price - and take the mega luxury bentleys' and Lamborghini and then the cheap mitsubishi mirage and Chevy Spark out of the calculation in the 6s tails.
 
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We ran into the NEED category for a car. Generally I’ve always been able to pay cash for a car, as I’ve been very fortunate that way. We are frugal people, and I can fix cars, so buying a 15-18k car can be done if planned out, which is what we used to do. In fact, I over paid for my $6000 2226k mile Camry (would have been a $3000 car pre-Covid) in May 2020 due to how expensive and junky cars were then. It’s gotten worse.

This time, the 15-18k car isn’t what it used to be. So, for the second time in my life, I had to finance a car to get something above good. I’ll be driving this for the next 10 years. In 5 we will need to replace my wife’s 2014, most likely due to rust.

Living without debt is going to be tougher for people. Costs are just too high.
 
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