Buyers reacted to record car prices by borrowing more and making bigger 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, the data shows. released Thursday by Edmunds, a Santa Monica, Calif.-based car shopping analytics firm.
Buyers are putting around 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 for a longer term.
Lower interest rates helped a little. 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 were $473 in the second quarter, up 14.8% from a year earlier and 9.5% from the first quarter.
Jessica Caldwell, executive director of ideas at Edmunds, said the market was tilting towards the wealthy.
“It’s not a shopping environment for people on the edge of being able to afford a new car,” Caldwell said. “Average loan terms are already quite long and interest rates are relatively low on average, so the consumer really has to make up the difference in price.”
Tighter inventories 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 new, so anyone re-entering the auto market for the first time in a while faces a serious price shock. ‘sticker.”
The 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 pickup trucks.
“Expensive, optioned pickup trucks have been consumer darlings and the biggest culprit for driving up the industry’s average transaction price during the pandemic, but the inventory sink eventually dried up,” Caldwell said.
Cox Automotive forecast dealers will sell 16.5 million new cars and light trucks this year. Senior Economist Charlie Chesbrough said the sales pace in the first half was a seasonally adjusted annual rate (SAAR) of 17.1 million vehicles, but the second half will be slower.
“Even though there will be strong consumer demand, they can’t buy what isn’t there,” Chesbrough said. “It’s difficult to estimate how long the supply shortage will last, as the issue varies widely across product lines and geography, but the next few months will certainly be telling.”
Jonathan Smoke, chief economist at Cox Automotive, said tight supplies allowed dealers to charge high prices and make record profits.
“When it comes to retail auto sales, the pandemic is in the scrutiny mirror,” Smoke said. “Dealers are primarily focused on one issue: inventory.”