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Most purchasers are priced out of the market by the rising cost of new automobiles as automakers reduce their inventories while making record profits.
According to data reported by Bloomberg News, the average cost of a new automobile in the US has increased 30% to $50,000 since 2019.
According to Kelley Blue Book’s parent firm Cox Automotive, leasing a new automobile would cost $777 per month – nearly double what it did in 2019.
The average monthly take-home pay in the US is $4,318 per month after taxes, according to the Bureau of Labor Statistics. Around 18% of a person’s monthly take-home salary would need to be set aside for the purchase of a new automobile.
The choices aren’t all that much better for individuals wanting to purchase a secondhand automobile. According to Cox statistics, the average cost of a used car is about $27,000.
The average American would have to pay $544 per month to lease a secondhand vehicle.
When a global chip shortage negatively disrupted production prior to the coronavirus pandemic, the car industry frequently stocked up on inventory and offered discounts.
Instead, automakers have lowered supply and raised prices for their goods.
US automakers have benefited from the outcome.
A record-breaking operational profit of $14.5 billion was just revealed by General Motors.
Before 2019, automakers typically kept 60 to 100 days’ worth of inventories on hand. Currently, that time period has been cut in half, according statistics provided by Bloomberg News.
Ford reported an adjusted profit of $10.4 billion for 2022, falling short of its projected $11.5 billion. Revenue for the corporation increased to $44 billion from $37.7 billion in 2021.
Detroit is concentrating on keeping prices down, despite recent hints that the chip bottleneck is lessening.
GM CEO Mary Barra promised investors last year that “we’ll never go back to the inventory levels that we were at in the past.”
Ford, GM’s main competitor, follows the same strategy. Jim Farley, the CEO of Ford, declared that his company will similarly stop building up enormous inventories and then giving consumers deals and incentives to get rid of them.
In spite of the depressing statistics, there is some good news for consumers: Vehicle supply on dealer lots are increasing, albeit slowly, and automakers anticipate at least a little decrease in pricing this year as inventories increase.
Due to a component bottleneck and high demand for new vehicles, automakers revealed on Wednesday that they sold 13.9 million cars, trucks, SUVs, and vans in 2017. Since 2011, when the economy was still bouncing back from the Great Recession, this was the lowest sales figure recorded.
However, fourth-quarter sales increased modestly, and stocks increased as manufacturing was able to grow thanks to better-than-expected part availability.
As long as demand continues high, analysts now anticipate sales to increase by around 1 million to 14.8 million this year. However, they will still fall well short of the 17 million that were born annually before the epidemic.
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