Buyers responded to record car prices by borrowing more and making larger down payments.
From the fourth to the second quarter, average new car prices rose 1.5% to $ 40,656, while used car prices rose 9.3% to $ 30,224, according to data published Thursday by Edmunds, a car buying analysis company based in Santa Monica, Calif.
Buyers are giving up about 12% on new and used cars, rates that have increased over the past year.
To cope with the surge in used cars, they are borrowing more money over the longer term.
Lower interest rates helped a bit. They averaged 7.9% for used cars in the second quarter, down 30 basis points from a year earlier and 20 basis points from the first quarter.
Still, monthly payments on used cars rose to $ 473 in the second quarter, up 14.8% from the previous year and 9.5% from the first quarter.
Jessica Caldwell, executive director of ideas at Edmunds, said the market is leaning toward the rich.
“It’s not a shopping environment for people on the fringes of being able to afford a new car,” Caldwell said. “The average loan term is already long enough and interest rates are relatively low on average, so the consumer really has to make up the price difference. “
Tighter stocks and fewer discounts in the new car market are pushing more buyers into the used car market, “pushing used car prices to astronomical levels,” she said. “Car buyers are used to getting deals, and often well below the sticker price for the new one, so anyone coming back to the auto market for the first time in some time risks a serious shock. ‘sticker.”
Slower growth in new car prices reflects a shift in the mix with more sales of lower-cost SUVs and passenger cars, and fewer beefy pickups.
“Expensive and optional pickup trucks have been the darling of consumers and the main culprit in increasing the industry’s average transaction price during the pandemic, but the inventory sink has finally dried up,” said Caldwell.
Cox Automotive predicts that dealers will sell 16.5 million new cars and light trucks this year. Senior economist Charlie Chesbrough said the pace of sales in the first half was a seasonally adjusted annual rate (SAAR) of 17.1 million vehicles, but the second half of the year will be slower.
“Even though there will be great consumer demand, they can’t buy what isn’t there,” Chesbrough said. “The duration of the supply crisis is difficult to estimate as the problem varies widely across product lines and geography, but the next few months will certainly be revealing.”
Jonathan Smoke, chief economist at Cox Automotive, said tight supplies have allowed dealers to demand high prices and record record profits.
“When it comes to retail auto sales, the pandemic is in the scrutiny mirror,” Smoke said. “The main focus of dealerships is on one problem: inventory. “