According to the analysis, new automobile prices have climbed by over 29% between August 2019 and August 2022. Prices for secondhand cars over three years old climbed by a staggering 52%.
Are you looking for a new or used car? According to a survey by iSeeCars, you might not be able to buy one of the classics you have in mind.
According to the report, income growth over that time period was only 13%.
According to iSeeCars Executive Analyst Karl Brauer, “increasing prices of new and used automobiles have outpaced income growth due to supply chain bottlenecks and higher demand.”
The study also discovered that the average of the Car Affordability Index started to decline as soon as the epidemic got underway.
In order to determine how affordable an automobile is, the Car Affordability Index compares the average household income to a target income. A car is more affordable if the index value is higher than 100. Numbers below 100 indicate that it is more expensive.
A three-year-old used automobile affordability index averaged 99.5 in April 2019. The analysis found that the average fell to 93.4 when the pandemic struck in 2020. The average is currently 72.0 in 2022.
Top 10 used automobiles whose prices will no longer be within reach in August 2022:
- Toyota Avalon- $35,137
- Chevrolet Traverse- $34,751
- Volvo S60- $34,615
- Ford Mustang- $33,500
- Acura TLX- $32,360
- Toyota Prius- $32,090
- Toyota RAV4- $32,056
- MINI Convertible- $31,779
- MINI Countryman- $31,318
- Volkswagen Golf GTI- $30,868
According to the report, Nissan Maxima, Ford Edge, and Honda CRV are closely following.
I don’t know who needs to hear this but used car prices are down.— Genevieve Roch-Decter, CFA (@GRDecter) October 19, 2022
This is massively deflationary. pic.twitter.com/LVGjLcDZsJ
Four new cars were identified by iSeeCars as no longer being considered affordable as of August 2022 pricing after analyzing the same pricing threshold:
39,833 for a Nissan Frontier
$39,767 for a Chrysler 300
$39,570 for a Kia Sorento
$39,030 for a Jeep Cherokee
While it may be tempting to take out a lengthier loan to reduce monthly payments or to make a smaller down payment, Brauer warned that purchasers will ultimately spend even more in the long term in current high-interest climate.