Record Car Prices Likely to Climb Higher Still
Cars are more expensive than ever, and experts say even higher prices are on the way.
The days of big cash-back offers and other incentives that automakers depended on to sell excess cars and trucks have gone the way of manual transmissions and roll-down windows.
“The industry has essentially cleansed itself of high incentives,” said Jeff Schuster, senior vice president of auto research firm LMC Automotive.
The deep cuts in production capacity during the restructuring of recent years, coupled with the recent rebound in demand for new cars from consumers, means that shoppers can’t find the deals they once did.
“You’re going to see pricing going overall higher,” said Jesse Toprak, analyst with sales and pricing tracker TrueCar. “The demand is higher and supply is more tightly controlled.”
TrueCar estimates the price of a typical car or light truck reached a record high of $30,748 in March, up nearly $2,000, or 7%, from a year earlier.
Prices have been steadily rising over the last three years, since sales and prices both plunged during the darkest days of the recession as General Motors (GM, Fortune 500) and Chrysler Group tumbled into bankruptcy.
“You’ll still see some summer sales, but we’ve been adding about $1,000 a year to prices over the last several years,” said Toprak. “There’s no reason to think that trend line is going to turn around, even if it slows down a little bit.”