Vehicle Affordability a Growing Problem

According to the Wall Street Journal, vehicle affordability is becoming a problem for both dealerships and buyers.  Dealers reported that increasing prices and a lack of affordable models were keeping prospective buyers away.  Now coupled with the rising interest rates, dealers believe that buying a car is out of reach for many consumers. Dealers are also experiencing an influx of cancelled orders as a result of the rising interest rates.

In order to improve affordability, the availability of lower-priced vehicles must increase. Auto inventories continue to improve but remain at about half of their pre-pandemic levels, and automakers expect this trend to continue through 2023.  According to J.D. Power, the average price paid for a new vehicle hit a record of $47,362 in December 2022.