It has almost never been as hard to buy a new or used car in the United States as it is today, despite improving supply issues and inflation beginning to steady.
Vehicle transaction prices — the price you actually end up paying after any dealer discounts or markups — have been climbing higher and faster since 2020 than any other point in more than 35 years, according to recent data from the Bureau of Labor Statistics.
The consumer price indexes for both new and used cars — the average changes in vehicle transaction price over time — are much higher than they were four years ago in 2019.
There is a silver lining. BLS data shows inflation for used cars has been cooling down just as dramatically since December 2022 as it increased in the months before that. But used cars have a long way to go before approaching 2019 sales prices and new car prices have yet to slow down.
The average transaction price of a new car has jumped nearly $12,000 in the past five years, according to data from auto website Edmunds.com. For used cars, the average transaction price is still nearly $9,000 higher than it was in February 2018.
“[Prices are] coming down a bit, but not coming down nearly as fast as one would hope,” said Ivan Drury, the director of insights at Edmunds.com. “If you look back, or if you’ve ever done a transaction before in your life, all of these numbers are bad.”
Car buyers haven’t seen price hikes like these since the 1970s and 80s. What makes the 2020s unique is how much car prices rose in a short period of time. Over the used car market’s worst 12 months of the pandemic, the index rose 45%. There’s never been a 12-month period since the BLS began keeping records in 1947 when used car prices have inflated more.
Recent trends in prices have been similar across regions of the United States, though in some areas, the starting prices may be higher than others. Preferences for more expensive vehicles in some areas drive these regional differences, Drury said.
There’s a large market for pickup trucks and SUVs in the south, he said, where BLS data shows new car transaction prices have risen the most since 1987.
The average price of a large pickup truck nationwide was $62,430 in 2022, according to Edmunds.com. The average midsize car price was only $31,381.
The road to more reasonable prices for new and used cars remains littered with potholes.
Consumer tastes have shifted towards larger and more expensive pickup trucks and SUVs. New car buyers are loading up on options, compared to more stripped-down models available a few years ago. Both of these trends drive up prices and also create incentive for automakers to produce pricier rides. The used market is still affected by the decline in leasing trade-ins and rental car companies competing with consumers for the same limited supply of three to five-year-old vehicles.
“We’ve got a few things that are really hindering the US market,” Drury said. “I don’t see those going away anytime soon.”