Average New Car Price Now Exceeds $40,000

[stein_325i]

Originally Posted by USA Today

The average price of a new vehicle has topped $40,000 for the first time ever as Americans switch from passenger cars to more-expensive SUVs and pickups.

With prices rising, the average down payment on new cars, trucks and SUVs reached an all-time high in the fourth quarter, according to analysts at car-research site Edmunds. At the same time, the average amount borrowed to finance a new vehicle was close to an all-time high. The bottom line is that Americans with the financial wherewithal to buy a new ride are still enthusiastic about it despite the ongoing pandemic.

"People that are in the new car market are somewhat insulated from the downturn experienced by the pandemic," said Jessica Caldwell, executive director of insights at Edmunds. "It’s almost like we have two different countries within this country of people who are buying new houses, buying new cars, versus other folks who are perhaps in the service industry and are struggling."

In the fourth quarter, the average price of a new vehicle was $40,179, according to Edmunds. In December, it was $40,573. Both are records. The 2020 Volkswagen Atlas Cross Sport is one of many new SUVs that have arrived in recent years, replacing passenger cars that have been discontinued, such as the VW Beetle.

The average new-vehicle buyer borrowed $35,373 and placed a down payment of $4,734 in the fourth quarter of 2020, up 5.5% and 9.4%, respectively, from the fourth quarter of 2019.

"A lot of it just has to do with cheap money," said Andrew Gilleland, general manager of Toyota's Lexus brand. "You can go out and get a pretty reasonable interest rate but also customers are looking for more equipment on their cars."

Down payments typically rise in the fourth quarter, a time when luxury buyers are more prevalent in showrooms as premium brands try to get rid of their current-model-year vehicles, Caldwell said. But the nation's pivot from cars to SUVs and pickups is driving much of the trend of increased down payments and borrowing.

With prices creeping up, new vehicle buyers in the fourth quarter agreed to average monthly payments of $581, up 1.9% from a year earlier, according to Edmunds.

Expect the trends to continue. Half of the new vehicles sold in the U.S. were SUVs in 2020, marking an all-time high, and 20% were pickups, according to research firm IHS Markit.

IHS said there's still room for SUVs to grow in popularity. The company estimated that the SUV market share would rise to 52% in 2021. Essentially all of the major automakers have added SUVs in recent years, including major entries from Toyota, General Motors, Ford, Hyundai, Subaru, Kia and Volkswagen.

The trend has changed the complexion of automakers once known for their passenger cars. Cars like the Chevrolet Cruze, Ford Focus, Honda Fit and Volkswagen Beetle have been discontinued, while SUVs like the Chevrolet Blazer, Ford Bronco, Honda Passport and Volkswagen Atlas have been created from scratch.

Scott Keogh, CEO of VW U.S., noted that large SUVs like the Atlas have much higher profit margins than small cars like the Beetle. VW has made a heavy investment to shift its lineup to SUVs in recent years, and it's worked. SUVs represented 58% of the brand's sales in 2020, up from 16% in 2016, Keogh said.

Want a new car? Get ready to pay more than $40,000 as prices continue to rise

[RugbyBro]

Originally Posted by stein_325i

Want a new car? Get ready to pay more than $40,000 as prices continue to rise

Prices going up and loan terms getting longer. It still boggles my mind that people are able to buy cars on 7 year loans

[dreamingat30fps]

Originally Posted by RugbyBro

Prices going up and loan terms getting longer. It still boggles my mind that people are able to buy cars on 7 year loans

So are there 7 year loans because cars cost $40k or do cars cost $40k because there are 7 year loans?

[RugbyBro]

Originally Posted by dreamingat30fps

So are there 7 year loans because cars cost $40k or do cars cost $40k because there are 7 year loans?

[BigHunk]

Canada
2010 base X5M 95t$
2020 base X5M 130t$
Lots of factors for that price raise, inflation, devaluation of Canadian $, hiring bad design team etc

[No Boost]

It's the $80k+ pick up trucks that make me laugh. You're going to haul scrap and beat the shit out of it so you can have a fully loaded truck with all the bells and whistles?

[No Boost]

Originally Posted by RugbyBro

Prices going up and loan terms getting longer. It still boggles my mind that people are able to buy cars on 7 year loans

Ridiculous
https://bimmerpost.com/forums/showthread.php?t=1657874

[stein_325i]

Originally Posted by No Boost

It's the $80k+ pick up trucks that make me laugh. You're going to haul scrap and beat the shit out of it so you can have a fully loaded truck with all the bells and whistles?

Apparently, at least for the luxury trucks which are used for actual work, what happens a lot of times is the business owners buy these expensive trucks because they need to have all the "luxury features", put little miles on them, then make them company vehicles, resulting in a lot of miles and a torn up exterior/interior.

Then you have the other group who buy a luxury truck to drive the same way they would any SUV or Sedan and just haul air and groceries, because they want that "king of the road" seating position.

[nioh_lbbm2]

"The average price of a new vehicle has topped $40,000 for the first time ever as Americans switch from passenger cars to more-expensive SUVs and pickups."

This article is pretty vague and doesn't say much. Is the average cost of all vehicles available in the USA market approaching 40k? Or is the average cost of all vehicles that are being bought reaching 40k?

If it's the former it doesn't really say anything, average costs can go up as more expensive vehicles are made available. There's still PLENTY of cars to choose from that are sub 40k.

If it's the latter then sounds like the spending habit of the average consumer has gone up. Cool story.

[No Boost]

Originally Posted by stein_325i

...they want that "king of the road" seating position and ego fulfillment.

some augmentation to your comment

[zx10guy]

Median price of new car purchases is much more useful versus average price.

I do have to say the number of options for the cheaper end cars is drying up. Everyone has to look like they are worth more than they actually are. But there are still options out there. I bought my 2019 C-HR new for $20,600 out the door and it wasn't at the end of the model year run. It was at the very beginning.

[nioh_lbbm2]

Originally Posted by zx10guy

Median price of new car purchases is much more useful versus average price.

I do have to say the number of options for the cheaper end cars is drying up. Everyone has to look like they are worth more than they actually are. But there are still options out there. I bought my 2019 C-HR new for $20,600 out the door and it wasn't at the end of the model year run. It was at the very beginning.

exactly. The article is stupid.

Even if americans are turning towards SUVs it doesn't mean they have to spend 40k either. Toyota RAV4, Honda CRV, Ford Explorer, Nissan Rogue, Kia, the list goes on and on for SUVs under 40k.

The article should be more about Americans BUYING cars costing 40k or more rather than a supposed average cost of vehicles being 40k.

[jmack]

Originally Posted by No Boost

It's the $80k+ pick up trucks that make me laugh. You're going to haul scrap and beat the shit out of it so you can have a fully loaded truck with all the bells and whistles?

Most don't even haul with them. Around here, a top trim half ton is essentially seen as a rural S class.

[stein_325i]

For those mentioning where is the average price paid vs cost of a vehicle, there is a brief mention in the article.

Originally Posted by USA Today

The average new-vehicle buyer borrowed $35,373 and placed a down payment of $4,734 in the fourth quarter of 2020, up 5.5% and 9.4%, respectively, from the fourth quarter of 2019.

Also in regards to the average cost, it actually is significant as the change in cost has substantially increased compared to previous records despite the pandemic. The 2019 record average price was $34k and 2018 was only a difference of less than $500. However, the change for 2019 to 2020 was $6,000, a large growth in a complicated year.

The reason is possibly this.

Originally Posted by Motor1

So who's out there driving prices up, even amid the coronavirus pandemic? By and large, it looks as though it's wealthier folks. Jessica Caldwell, executive director of insights at Edmunds, told USA Today that people buying new cars are financially insulated from the pandemic. "It's almost like we have two different countries within this country of people who are buying new houses, buying new cars, versus other folks who are perhaps in the service industry and are struggling," Caldwell said.

[David70]

Originally Posted by No Boost

It's the $80k+ pick up trucks that make me laugh. You're going to haul scrap and beat the shit out of it so you can have a fully loaded truck with all the bells and whistles?

A tiny percentage of work trucks actually cost anywhere close to $80k.

[David70]

Originally Posted by RugbyBro

Prices going up and loan terms getting longer. It still boggles my mind that people are able to buy cars on 7 year loans

Why? For the right person and right terms I would be happy to give someone a 10 year loan for anything they want to buy. You may not like the terms but there are numbers that make it work. Likely a bad idea on the buyers side but that is a separate issue.

[nioh_lbbm2]

Originally Posted by stein_325i

For those mentioning where is the average price paid vs cost of a vehicle, there is a brief mention in the article.


Also in regards to the average cost, it actually is significant as the change in cost has substantially increased compared to previous records despite the pandemic. The 2019 record average price was $34k and 2018 was only a difference of less than $500. However, the change for 2019 to 2020 was $6,000, a large growth in a complicated year.

The reason is possibly this.

All that article shows is that Americans are choosing to buy vehicles that are on "average" 40K

It doesn't mean cars on average are costing that much and people "need to prepare to spend 40k" as the article states.

Your quote from Motor1 is accurate would explain things. But USA Today's article is utter shit journalism

[stein_325i]

Originally Posted by nioh_lbbm2

All that article shows is that Americans are choosing to buy vehicles that are on "average" 40K

It doesn't mean cars on average are costing that much and people "need to prepare to spend 40k" as the article states.

Your quote from Motor1 is accurate would explain things. But USA Today's article is utter shit journalism

Its USA Today, gotta expect the clickbait headline. That's modern news sadly. I don't see too much issue with the actual contents of the article though.

[mkoesel]

Originally Posted by stein_325i

For those mentioning where is the average price paid vs cost of a vehicle, there is a brief mention in the article.

Yes. Interestingly, $35,373 + $4,734 = $40,107 which is very close to the $40,179 mentioned as the average price of the new vehicle. However, it still isn't absolutely clear what statistic is actually meant to be represented by that second number - vehicles being acquired by consumers (which would include leases and cash buys in addition to those being financed), or vehicles being built by manufacturers.

Originally Posted by nioh_lbbm2

All that article shows is that Americans are choosing to buy vehicles that are on "average" 40K

It doesn't mean cars on average are costing that much and people "need to prepare to spend 40k" as the article states.

True. Of course, even if the average vehicle being purchased/leased is $40k+ or heck, hypothetically $50k or whatever, that still would not mean one "*need* to prepare to spend" that much, since it's always an option to simply choose a lower-than-average priced vehicle. In other words, regardless of where the median is, one can always choose to be an outlier. In that regard, the language used in the article never had any hoping of being correct, strictly speaking.

That said, the trend away from passenger cars has certainly had an effect on selection for those looking for cheap transportation. If you look at prices of SUVs vs cars for any brand (well, any brand that actually still sells cars, that is), it is almost universally the case that the SUV lineup will have a higher price floor than the car lineup. Indeed - without studying the data, mind you - we may be only a half dozen or so small car discontinuations away from the lowest priced vehicles being sub-compact SUVs starting at roughly $20K, which would be a big jump from today's mid $1X,xxx sub-compact car starting prices. Not that I am saying all those cars *will* be discontinued soon, but it certainly is possible over the next generation or so.

[GenXer]

I wish my car was average price especially with my fillet mignon taste and spaghetti budget.

[premier3is]

Originally Posted by dreamingat30fps

So are there 7 year loans because cars cost $40k or do cars cost $40k because there are 7 year loans?

Lol, side note... if you really need a 7yr loan on a car, I don't think you should be buying it.

[dreamingat30fps]

Originally Posted by zx10guy

Median price of new car purchases is much more useful versus average price.

I do have to say the number of options for the cheaper end cars is drying up. Everyone has to look like they are worth more than they actually are. But there are still options out there. I bought my 2019 C-HR new for $20,600 out the door and it wasn't at the end of the model year run. It was at the very beginning.

I bought a 2020 Corolla last year. Mainly because my gf doesn't like to drive my giant ass truck (and honestly neither do I unless I have to) or the C7 corvette I had at the time. I think it was like under $19k OTD.

Honestly... if I was not a car guy... I don't see what more the average person could want in a car. It has AC, sunroof, real wheels, apple car play which gives you navigation, keyless entry and it has a bunch of safety stuff like blind spot monitor and even has adaptive cruise control with lane keeping. I'm sure you can even get leather seats in the higher trim levels.

If the shit were to hit the fan tomorrow and I needed to save as much $$ as possible... I would sell all the other vehicles and keep the corolla.