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Average American Can No Longer Afford “Average-Priced” New Car or Truck

But upward trend is likely to continue.

by on Mar.12, 2014

The price of the average Chrysler product rose 6.1% year-over-year in February, according to TrueCar.

New car prices have been rising rapidly in recent years, various studies showing that Average Transaction  Prices – what buyers actually pay after factoring in incentives and options – have hit record levels.  And that means that more and more American motorists are being priced out of the market.

The average median-income household can no longer afford to purchase the “average-priced” new car or truck in 24 of the country’s 25 largest metro areas, according to a new study by the financial website Interest.com.  The exception is Washington, D.C., according to the study, which also found that in 16 cities, median family incomes fell at least $10,000 short of what it would take to buy the typical new vehicle.

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“Too many families are spending way too much on new cars and trucks,” said Mike Sante, managing editor of Interest.com. “Just because you can manage the monthly payment doesn’t mean you should let a $30,000 or $40,000 ride gobble up such a huge share of your paycheck.”

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Auto Prices Spiking as Incentives Tumble

Japanese parts shortage masks other increases.

by on May.16, 2011

Prices of the old Honda Civic were rising even before the launch of the 2012 model.

Good new or bad, it depends on whether you’re making or selling a car, but one thing indisputable is that the price of the typical new car, truck and crossover has been rising fast this year.

Motorists, used to finding great deals during a long and deep recession, will likely be surprised to see vehicles not just costing more than a year ago, but in some cases several thousand dollars more than just a few months ago, based on industry tracking data.

The biggest and most immediate factor is the vehicle shortage created by the natural disaster that struck Japan on March 11.  But makers are also beginning to pass on some of the higher costs they are paying for essential commodities and – in some cases, simply betting that an improving U.S. automotive market will allow them to reduce incentives and raise prices.

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“The current environment will set the industry up for very strong pricing,” said Rod Lache, auto analyst with Deutsche Bank. In April, he estimated, U.S. automakers were already getting from $700 to $1,000 more than they did the year before.

The makers will take the extra money any way they can, though they have generally held back on outright price increases.  Toyota, for example, put in place a relatively modest hike, at the beginning of May, running to just over 2%.  But according to data from TrueCar.com, some of the maker’s models, such as the Prius, are delivering Average Transaction Prices, or ATPs, of as much as $3,000 more than what they went for at just the beginning of 2011.

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