Everyone must be rich!
New data from Kelley Blue Book shows people are shelling out more money than ever for a new car. The KBB new-vehicle average transaction price hit $48,182 in July, edging out the previous record of $48,043 set in June. It’s worth noting that’s just slightly above base MSRP for the 2023 BMW 430i. Something is seriously off with car purchasing habits.
Maybe we’ll see more repossession soon, like we warned about here?
The economy must be doing great and wage erosion isn’t a real thing if people are willing to shell out this kind of cash for a new car, right? We know from other data sources that more Americans are getting a second or third job as inflation continues to make everything more expensive.
Supply for new cars hasn’t improved since late last year, so perhaps some shoppers have grown desperate for a new vehicle and are willing to pay whatever dealerships ask. KBB says Honda, Kia, Land Rover, and Hyundai were able to land 5% to 8% over sticker price on average in July, so people are especially interested in those brands for whatever reasons. Meanwhile, Ram, Volvo, Lincoln, Buick, Alfa Romeo, and Fiat saw average sales prices below MSRP.
Another possible factor for the continued increase in car prices is the fact lenders are offering longer terms for loans. It wasn’t that long ago that anything over 60 months was unheard of. That also might help explain why luxury vehicle sales continue to be strong.
I’ve known a few people in my life who openly admitted they thought people were rich simply because they had expensive items, not that they might have a lot of money in the bank. This attitude I suspect has become fairly prevalent in society today as evidenced by these high average new car prices. However, I’ve known plenty of people who have little money but a bunch of cool stuff they can’t afford to keep. Maybe this is why vehicle repossessions are surging?
Source: Kelley Blue Book
Images via Mercedes-Benz, BMW, Stellantis