Repelled by high car prices, Americans are holding on to their vehicles longer than ever By TOM KRISHER May 15, 2023, sourced via the AP
ANN ARBOR, Mich. (AP) — With new and used cars still painfully expensive, Ryan Holdsworth says he plans to keep his 9-year-old Chevy Cruze for at least four more years. Limiting his car payments and his overall debt is a bigger priority for him than having a new vehicle.
A 35-year-old grocery store worker from Grand Rapids, Michigan, Holdsworth would probably be in the market for a vehicle within a few years — if not for the high cost. For now, it’s out of the question.
“You’re not going to get one for a price you can afford,” he said.
Holdsworth has plenty of company. Americans are keeping their cars longer than ever. The average age of a passenger vehicle on the road hit a record 12.5 years this year, according to data gathered by S&P Global Mobility. Sedans like Holdsworth’s are even older, on average — 13.6 years.
Blame it mainly on the pandemic, which in 2020 triggered a global shortage of automotive computer chips, the vital component that runs everything from radios to gas pedals to transmissions. The shortage drastically slowed global assembly lines, making new vehicles scarce on dealer lots just when consumers were increasingly eager to buy.
Prices reached record highs. And though they’ve eased somewhat, the cost of a vehicle still feels punishingly expensive to many Americans, especially when coupled with now much-higher loan rates.
Since the pandemic struck three years ago, the average new vehicle has rocketed 24% to nearly $48,000 as of April, according to Edmunds.com. Typical loan rates on new-car purchases have ballooned to 7%, a consequence of the Federal Reserve’s aggressive streak of interest rate hikes to fight inflation.
It’s all pushed the national average monthly auto loan payment to $729 — prohibitively high for many. Experts say a family earning the median U.S. household income can no longer afford the average new car payment and still cover such necessities as housing, food and utilities.
Used vehicle prices, on average, have surged even more since the pandemic hit — up 40%, to nearly $29,000. With an average loan rate having reached 11%, the typical monthly used-vehicle payment is now $563.