Why your next new car could cost you more than $50,000 in the US

() – They call it “price shock.” And if you haven’t been to a dealership since before the pandemic, get ready.

According to data from Edmunds, Americans paid an average of $47,612 for a new car in October. That’s a jump of almost $10,000 since October 2019, before the pandemic. That means new car prices have risen much faster than most goods and services.

The price increase has multiple origins: The pandemic snarled supply chains and limited essential auto parts. Buyers increasingly prefer larger cars with more features, continuing the decades-long shift toward larger, more expensive SUVs and trucks.

But a big part of the reason Americans are paying nearly $50,000 for a car is because automakers decided to go all-in on expensive cars. The more they charge for a car, the more money they make on it.

“It’s hard to find a car under $30,000 from an American manufacturer,” says Ivan Drury, director of research at Edmunds. “They are eliminating basic models and finishes, which are no longer the bulk of the business. Minimum prices are rising.”

Today’s cars incorporate all kinds of driver assistance functions, such as automatic braking, adaptive cruise control and blind spot warning systems.

“People didn’t know they wanted them (these features) until they had them,” says Charlie Chesbrough, economist and senior director of industry insights at Cox Automotive. “It’s a mix of what consumers want and what the industry is moving toward. “The market is abandoning the price point below $35,000.”

There are also more electric vehicles, as well as growing demand for hybrids, both of which are more expensive than traditional gasoline-only cars.

The cheapest cars left tend to be foreign brands. The average price of a Nissan sold in the United States in the third quarter stood at $35,362, and that includes sales of its Infiniti luxury brand.

The traditional “big three,” General Motors, Ford and Stellantis, which sells under the Jeep, Ram, Dodge and Chrysler brands, have virtually abandoned the sedan market to focus almost entirely on trucks.

Ford currently only sells one traditional “car,” the Mustang, a two-door coupe rather than a family sedan. The last Chevrolet that is not an SUV or pick-up It will leave the factory this month.

The exclusion of almost everything other than a big and tall crossover or SUV has already raised the average sales price to $50,922 at GM, $54,963 at Stellantis and $55,632 at Ford.

Although average prices are down US$142 compared to a year ago, they could soon rise further.

That’s because high interest rates have kept prices in check the last couple of years, Drury said. With the Federal Reserve raising interest rates to a two-decade high to combat inflation, buyers had to spend more on their auto loan payments. Now that rates are falling, that frees up cash to spend on expensive features.

The average rate on a new car loan, 7% in October, is well above what it was at the start of the pandemic. The combination of higher interest rates and higher car prices, along with the larger average loans taken out to purchase them, raised the average monthly car payment to $742 in October.

“The only thing that kept it from going higher was interest rates,” Drury said.

“If the money were a little cheaper, we would probably be reaching $50,000 now,” he said. “If they can spend more on a car instead of spending more on financing, they will.”

And prices could rise even further if President-elect Donald Trump makes good on his threats to impose heavy tariffs on imports, especially in the auto sector.

Details remain scarce, but even if the tariffs are limited to finished cars, it could raise prices for cars built in U.S. factories by reducing competition from lower-priced foreign models, said Jeff Schuster, vice president of global research. automotive from the consulting firm GlobalData.

Additionally, many of the cheapest models available at American dealerships are imported from factories abroad or in Mexico.

And tariffs may also apply to auto parts. And that would make all cars made in the United States more expensive, because no vehicle is made with 100% American parts.

“Those costs will be passed on to car buyers. “They are not going to be absorbed by automakers or suppliers,” he said.