Why Are Cars Suddenly So Expensive?

Why Are Cars Suddenly So Expensive?
Over the last three years we have seen the biggest car price increases in history. Last year the average cost of a new car in the United States was forty-seven thousand dollars and the average used car price today is just under thirty thousand dollars.
Car buyers today aren’t just faced with higher car prices, the average interest rate on a new car or truck loan has reached just under nine per cent and car insurance costs are rocketing too. What is going on?

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[MrFoof]

Patrick has the classic used car salesman suit to be convincing enough to get you to commit to the TruCoat™ you didn't ask for.

[tonycosta]

My wife’s car was declared totaled during the pandemic. We looked around for a Toyota RAV4 EV and most dealers was charging huge markups. We just walked out of the dealership and didn’t even enter a few after looking at the pricing on cars in the lot. Eventually we found a dealer that had the car she wanted on order from the factory and they only wanted the MSRP. We bought it on the spot and got it about a month later. I can’t believe how much people are paying for cars. We are very high income earners but have never spent more than $35-36k for a new car. It’s the worst “investment” you can make.

[johnz]

Good video.
I have an auto repair shop.  What I'm seeing here in the rust belt is people who way over-paid for used cars still making payments on rusty worn out junk.  It's awful.

[tanyaperrin]

This is why I am still happily driving my 2002 Honda, which I bought new. Best value ever!

[HeronPoint]

47, 000 bought me a beach cottage walking distance but far enough away you don't hear the beach noise. It included a lower level that I modified for a cheap rental mortgage helper, and a washer/dryer room. Upstairs I installed a mini wood stove (self baffled) and still have two bedrooms and two baths. Today it bought my neighbor a VW Taureg. Ouch.

[drxym]

One thing I noticed immediately after restrictions lifted was how horrifically expensive renting a car was. The likes of Avis, Hertz etc. basically froze buying cars during the pandemic and then screwed customers over to pay for a new fleet. I imagine lack of rentals also increased second hand car scarcity.

[BlakeGillman]

Finally have income & to get my assets / life in order. Just in time for both cars and houses to be the most unaffordable they've been in 100 years.

[robin]

Part of the price hike is the end of small cars. Nearly all manufacturers have axed their smaller models (which had been gettering increasingly larger already anyway). Toyota is the exception so far, with the competitors pulling out of that market it might remain feasible for one or two makers to keep developing small/cheap cars. From a financial perspective doing so is increasingly just not worth it.

[ttpp]

No discounts here in Canada. You have to order and wait for your new car 3-6 months...minimum. Until that changes, prices will not be coming down.

[SNaveenMathew]

Dealers charge a premium for "faster delivery", but don't always deliver on their promise. Looks like dealers want to make as much money as they can before the market cools off.

[jeromebarry]

I haven't bought a car since my 2012 Ford Fiesta. I find myself watching more videos of used car dealers talking about used car prices lately. You've covered all the issues very well.

[cameronhoglan]

Personally I'm seeing a bit of a drop in the price of older cars for sale by the owners of the cars because many people are struggling with the inflation. Pricing at dealerships are still crazy though

[Yung_Eli]

I was one of those people that had leased a car at the end of 2019. It was the most basic Toyota Corolla hybrid that I could get at the time. At the end of my lease, I bought the car and sold it back to the dealership and netted about $8k after taxes and fees.

[markslowen]

Like the jacket PB - I was in a dealership a few weeks ago collecting a new car that was supposed to be unavailable due to demand but miraculously was available if as the salesman said (you can move fast) as this was a cancelled order.
To my surprise there were three other identical vehicles in the showroom all of which were immediately available- when pressed the salesman came clean and said these were all cars ordered by customers who can’t take delivery because they can’t get cleared for finance on the vehicles. This is a real sign of the times.

[omerahmed]

I just bought a GR86 a week ago and all I can say is thank God Akio Toyoda pushed so hard to have the 86 be affordably priced. I didn't have any mark-up and it was still painful between interest and the insurance on the car.

[most-average-athelete]

One thing I think is went amiss in this video. While the semiconductor shortage was one of the biggest impediment on manufacturing, this was mostly self inflicted by car industry. Almost all manufacturers cancelled their regular orders from chip fabs at the beginning of pandemic assuming the demand will stay low for the foreseeable future. When the demand came back fast and in quantities they asked for the semiconductors needed back, but unfortunately semiconductor industry does not work that way.
Every second a fab is not producing chips 24/7 it is a massive cost, so if you cancel your order specs are changed on the machines and filled with other orders. You will never get an instantaneous response for demanding a particular chip.

[chriskola]

"The high ... prices turned out to be surprisingly sticky... As manufacturers fought to maintain the fatter margins they'd enjoyed in 2021"

Yeah, there is a surprising amount of that going on lately. Not limited to cars.

[thorrad]

Just a note about the production quality of the latest videos: In the last several videos I’m noticing very good lighting techniques and sound capture! It’s not that the earlier ones were bad but the newer ones are looking more and more like something done by a professional media company and, at least to me, makes an impression that associates the quality of the intellectual content with the visual and audio quality. Looking and sounding great!

[BrkDownMedia]

I did a video over this and cars have been expensive since 2010. More importantly, dealers have been gouging, and consumers willingness to buy.

[frmcf]

My 2018 Ford with 60, 000 km is worth almost what I paid for it new. Crazy