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Official TFL poll: Is average new car price too high?

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Discussion Starter · #1 ·
Yikes, but is that before TT&L or after TT&L?

107666


As July opened, the average new car in America carried a sticker price of $41,263. That’s the highest number on record, according to Kelley Blue Book data, and the first time the figure has crested $41,000.

The average listing price was 7% above where it sat one year ago and 12% above pre-pandemic numbers from 2019.

Record Low Supplies
The reason? Low supply.

A worldwide shortage of microchips has forced automakers to slow the production of many models. That has left dealers with the lowest supply of new cars to sell since record-keeping began in 1976.

Luxury Car Prices Down, Affordable Car Prices Up
The average sticker price for a non-luxury vehicle rose by $353 during the month of June. It sat at $37,637 in early July.

The price of the average luxury vehicle fell slightly, starting July at $60,659.

New Car Affordability Falls to Record Lows
New car affordability also took a hit in June.

Increasing car prices don’t always mean cars are growing less affordable. Increasing wages and government programs can mean that Americans have more money to spend even though prices have risen.

That was not the case in June.

The Cox Automotive/Moody’s Analytics Vehicle Affordability Index measures how long it takes the average wage earner to pay off the average car. Cox Automotive reports, “The number of median weeks of income needed to purchase the average new vehicle in June increased to 37.0 weeks in June.” That’s the longest figure since the index began in 2012.

The news was almost entirely bad for new-car shoppers. “The price paid moved higher, incentives declined, and estimated median incomes fell,” Cox explains. “Offsetting some of the inflation, the average financing rate decreased, which helped to limit what would have been an even higher increase in the monthly payment.”
KBB
 

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i love stats like this
This largely a meaningless statistic. Median new car price is much more useful.

That said, I would suspect that the median new car price has also gone up significantly due to the current demand+lack of supply.
exactly. add a bunch of people using PPE loans to buy exotics and watch it skew the results.

But what I really think it happening is cars selling at MSRP, or above MSRP and all the printed money people are flipping their junk for good money and upgrading to nicer cars.
 

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But what is the mode on new car prices?
And Audi ad came up and I clicked on it, $2k back.

Most VW's this spring/summer were $1500 back easily, sometimes $2k. I'm sure the kpops and domestics are better deals but these discounts will usually be reflected in value/trade-in later.
 

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Considering what $40K would get you in power, features, options and safety 20 years ago, it's the biggest value going.
 

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This largely a meaningless statistic. Median new car price is much more useful.

That said, I would suspect that the median new car price has also gone up significantly due to the current demand+lack of supply.
Median values are generally more useful but math and data iz hawd :(
 
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The median may be more useful but I think some people are over estimating how much exotic/ultra high dollar cars are skewing the ATP. Don't forget the top three best selling vehicles are full size pickups which can reach $40K without trying the way most people option them (i.e., crew cab/4WD) and there's plenty of other crossovers and SUVs in the top 25 that get pricey in a hurry.
 

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I think the median isn't as far off from the average as it may seem and it's stupid they resort to these tactics for better headlines. Like $37,000 would still be an eye-popping number as a more true representation of the American purchases of new cars but $43,000 is headline click grabbing so that's what we get reported.

I'm not entirely pulling this out of my ass, when you get above "average" luxury, your Es and S classes, the sales drop off a cliff to ultimately a drop in the bucket. Yeah that one car might be worth the same as 20 Civics but it's such a small drop in the bucket by comparison. Just a few vehicles. Exotics aren't worth mentioning when Bugatti sells like 20 cars a year.

There are 17,000,000+ vehicles sold in the US every year, BMW sells 300k, Toyota sells 2,000,000. Even if the average cost of a BMW is 40% higher which I think is probably a little generous when you consider trucks and SUVs, it's still not hugely weighted. So you can see as this plays out down the lines of makes and averages, it's just not going to be as far off as people think from median:average
 

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Discussion Starter · #12 ·
Moew.

I did a topic on Nero. It's a $55k shoebox with a battery. Thanks EV's.
Is that before the $7,500 free government EV cheese money?
 

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Sometimes cats have points, I bargained shopped for months and months and months obsessively and looked at the Niro EV in 3 dozen ways and I could not see the financial value in it in comparison to what's out there. I know industry people get upset when you compare it to the Kona but how can you not? Same power train, general size, etc but it's uglier, which, does matter, doesn't really offer much in terms of more doodads and is more expensive.

I wanted the Niro to be the dorky cheap EV that no one knew about and I drove around in Korean luxury but it doesn't want to be that car. Kia thinks a hatchback shape from 2009 with a shared power train and general optoins from the Kona somehow makes it a more a expensive vehicle.

How are they selling literally any of them at these prices?
 

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Article says the mean went up overall and down on luxury cars. I think that covers all the important bits. And anyway we already knew people are paying more for cars this is just backing it up.

But what is the mode on new car prices?
Right? What about skew, why not the whole distribution? TSL; The Statistics Lounge.
 

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The median may be more useful but I think some people are over estimating how much exotic/ultra high dollar cars are skewing the ATP. Don't forget the top three best selling vehicles are full size pickups which can reach $40K without trying the way most people option them (i.e., crew cab/4WD) and there's plenty of other crossovers and SUVs in the top 25 that get pricey in a hurry.
The other issue you have with car prices is an uneven distribution. There is no modern car sold for less than $15,000 (save for the occasional Mitsu Mirage). So there is a pretty hard lower limit on values -- but there is no upper limit. And the upper end of the spectrum has generally grown much more rapidly than the lower limit (which eeks up little by little with inflation -- forgetting momentarily about the recent new car bonanza). So if you think of the spectrum of car prices, the low end is stagnant (which is were the majority of new cars sold are located), but the high end moves up elastically (even though the bulk of new cars cluster around the lower end). This makes average sales price not a very good statistic for determining how much the average, middle class American spends on a new car.

Median, on the other hand, picks out the car that is exactly in the middle of new cars sold -- it isn't directly affected by the more elastic prices on the high end of the price spectrum.
 

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The other issue you have with car prices is an uneven distribution. There is no modern car sold for less than $15,000 (save for the occasional Mitsu Mirage). So there is a pretty hard lower limit on values -- but there is no upper limit. And the upper end of the spectrum has generally grown much more rapidly than the lower limit (which eeks up little by little with inflation -- forgetting momentarily about the recent new car bonanza). So if you think of the spectrum of car prices, the low end is stagnant (which is were the majority of new cars sold are located), but the high end moves up elastically (even though the bulk of new cars cluster around the lower end). This makes average sales price not a very good statistic for determining how much the average, middle class American spends on a new car.

Median, on the other hand, picks out the car that is exactly in the middle of new cars sold -- it isn't directly affected by the more elastic prices on the high end of the price spectrum.
Article says the average luxury car price went down in the same time frame. So the median and thus "average person" sales price likely went up by more than the average indicates, not less.

IOW, you're right that the prices might not fall on the low end, but the number of budget cars sold does fall, so there's less downward pressure on the average.
 

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Article says the average luxury car price went down in the same time frame. So the median and thus "average person" sales price likely went up by more than the average indicates, not less.

IOW, you're right that the prices might not fall on the low end, but the number of budget cars sold does fall, so there's less downward pressure on the average.
Also, it's KBB's analysis of car sales, and as far as I know they don't track the ultra-lux segment (i.e. Bentley, Ferrari, Lambo, etc.). So, even if sales of this segment exploded, it's not necessarily captured in the average price figure.
 

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As long as the Corolla is still out there offering quality transportation with good comfort and a generous amount of standard features starting ~$20K I'm not concerned.
 

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How do people afford these things? Isn't the median salary in the US like $70k? That's a huge chunk of one's salary.
 

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How do people afford these things? Isn't the median salary in the US like $70k? That's a huge chunk of one's salary.
The median new car buyer isn't the same as the median earner. People well below the median typically aren't buying any car at all. People below are more typically buying used cars.

Besides that, low interest rates and longer financing terms have allowed people to buy more expensive cars relative to their salary. This is somewhat sustainable given that cars last longer than they used to. So 50 years ago, you might have bought a car worth $20k (in 2021 dollars) every 5 years, and traded it in for the equivalent of $5k (net cost $15k every 5 years) because it was pretty much used up by then. Today, you buy a car worth $40k and trade it in 10 years later for $10k. The actual cost of driving hasn't changed even though the new purchase price has doubled.
 
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