New Car Prices at an All-Time High and Continuing to Climb Fast

By Trevor Dorchies | April 04, 2012
The days of buying a brand-new vehicle with a down payment of a week's worth of pay have gone by the wayside with such things like Tab soda, shell necklaces, and Shrinky Dinks. That's been accepted fact of life for a while now but just how high will the price of a new car climb you ask? According to a recent report from CNN Money, there doesn't appear to be an end in sight when it comes to ever-rising new car prices. In fact, the study found new-car prices to already be at an all-time high. Gone are the days of offers featuring big cash-back incentives and other offers since those were used to move excess vehicles waiting around at dealership lots. Automakers are better-managing production schedules these days. Gone are the days where new vehicles can be found at decade-old prices thanks to a recent rebound in the demand for new vehicles. Welcome to the revamped market of new vehicles that features an ever-changing landscape as major automakers work their way back to prominence. While incentives have become extraneous in today's economy, not all hope is lost as new cars have suddenly become a high-demand entity once again in the midst of a slowly rebounding economy. The combination of reduction in vehicle production and the recent spike in demands for new vehicles leave bargain-hunters with nowhere to go. New vehicle prices have been on a steady rise for three years now, ever since the economy took a nosedive back in 2009. Now with major automakers like General Motors and Chrysler reestablishing themselves after bankruptcy, the automakers are providing smaller discounts to move vehicles through dealerships.
An abundance of low-interest credit rates and higher price tags for used vehicles have also pushed new car prices to an all-time high, too.  Much of it is a result of summer 2010's "Cash for Clunkers" incentive program that salvaged hundreds of thousands of used vehicles. Higher-priced used cars put pressure on those looking for a reliable vehicle at an affordable price but give more value to a vehicle that someone is trading in. Volatile gas prices and new federal emissions regulations also have a hand in inflating new car pricing. At some point, the used car market will once again saturate with vehicles, but new-car prices are likely to only go up in the wake of increasingly difficult federal fuel economy and emissions standards. These new emissions standards are expected to add $1,000 to the total price of a new vehicle from now until the 2016 model year. After they're in full-effect, expect to factor in an addition $1,946 from then until 2025 when corporate average fuel economy (CAFE) legislation is set to push automakers to achieve an average 54.5 mpg across their fleets. However, it's likely the added vehicle cost will be made up in the long run with much more fuel-efficient cars and trucks on the road that cost less at the pump. Only time will tell. Source: CNN Money