Average monthly car payments hit a record high in May as the cost of new vehicles soared, thanks in part to higher interest rates and a dwindling supply chain.
The average monthly car payment last month hit $712, roughly a 1.7% increase compared to the month before, according to data from Moody’s Analytics. Additionally, the average price of a new vehicle in May rose to more than $55,000, according to AutoNews.
The rate in pricing for new cars has vastly outpaced income growth in the country.
The average consumer now must spend about 41 weeks’ worth of a median income to buy a new vehicle. The increase represents a 19% increase from the same time last year.
According to Kelley Blue Book, some cars sell above their sticker price due to declining inventory. The auto resource says that luxury vehicles are being sold for $1,030 more than the sticker price. At the same time, nonluxury vehicles are now selling for about $1,071 above the sticker price.
However, some experts predict prices may begin to drop for the remainder of the year and indicate some brands, such as Mazda, Hyundai, and Buick, might be able to provide lower-than-expected prices.
“Although prices are up for May, it’s only 1%, and so that indicates … we may be headed toward a place where the prices will start to decrease,” Brian Moody, executive editor for Kelley Blue Book, told ABC.
The used-car price surge has slowed a bit since its steep climb in 2021, but prices are still more than 22% higher than last year, according to the May 2022 Consumer Price Index Report.
Record 10% monthly surge in used car prices accounted for a third of the core CPI increase of 0.9%. Fed will discount this as stimmy funded pic.twitter.com/2LsxQPWWxz
— zerohedge (@zerohedge) May 12, 2021
Current used-car prices are still more than 48% higher than in the first quarter of 2020 before the pandemic caused widespread closures and market disruptions.
Rising fuel prices, shipping delays, disruptions in manufacturing due to climate change policies, and more have affected nearly every aspect of American life.
While President Biden claims to be leading the most robust economic recovery in the nation’s history, the impact on consumers’ wallets seems to portray a completely different picture.
