Americans Can No Longer Afford Their Cars | Newsweek
For decades, cars have been an integral part of the American lifestyle, symbolizing freedom, independence, and necessity. However, in 2024, the country’s enduring love affair with automobiles faces a critical turning point as car ownership becomes increasingly unaffordable for millions of Americans.
The cost of living has surged, encompassing the expenses associated with cars, including new and used vehicle prices, insurance, and repairs. The pandemic triggered supply chain disruptions and chip shortages, causing both new and used car prices to soar. Since 2020, new car prices have surged by 30 percent, while used car prices have skyrocketed by 38 percent.
In 2023, new car prices averaged $50,364, with used car prices averaging $31,030. Despite a slowdown in inflation that led the Federal Reserve to halt interest rate hikes, cars remain prohibitively expensive. Only 10 percent of new car listings are priced below $30,000, and just 28 percent of used car listings are below $20,000.
A report by Market Watch reveals that Americans need an annual income of at least $100,000 to afford a car, following conventional budgeting guidelines that recommend not spending more than 10 percent of monthly income on car-related expenses. This means that over 60 percent of American households, and a staggering 82 percent of individuals below the $100,000 income threshold, cannot afford a new car.
But why have cars become so expensive? The pandemic disrupted manufacturing supply chains and increased consumer demand, increasing prices. Dealers needed help to meet demand, forcing manufacturers to prioritize more profitable, higher-trim vehicles, further driving up costs. Additionally, automakers are increasingly focusing on expensive SUVs and trucks, discontinuing smaller, more affordable vehicles due to disappointing sales results and shifting consumer preferences towards larger, high-tech vehicles……….
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Rising Dough
How do the rising costs of car ownership impact the broader economy and consumer spending habits, and what can businesses and policymakers do to address this affordability crisis?
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The average annual cost in the first five years of new – car ownership rose to $12,182 this year, from 10,729 last yar
Because car prices are growing so rapidly at a high rate, its hard to be able to afford a car thats price keeps growing when he amount of money you have to pay for it remains the same
Due to inflation and rising interest rates, most consumers have less money to spend on unnecessary good and services like buying a car. Businesses can help address this affordability crisis by protecting and expand the National Housing Trust Fund.
The rising costs of car ownership impacts the economy as well as consumer spending habits by making consumers limit their money spending when it comes to a lot of other things so they can save up for a car and even for gas as the prices rise consistently. The economy will benefit from this because people are spending what they would on a house instead on a car. Business and policymakers can offer some type of deal to not only make more costumers but to make it more affordable for potential buyers like offering the money for a first car payment.
In the face of inflation and increasing interest rates, many consumers find themselves with reduced funds for discretionary spending, such as purchasing a car. Businesses can contribute to alleviating this affordability challenge by safeguarding and enhancing the National Housing Trust Fund.
The rising costs of car ownership can strain consumer budgets, leading to reduced discretionary spending. This, in turn, may affect businesses reliant on consumer demand. Policymakers could explore measures like public transportation improvements or incentives for eco-friendly vehicles to address the affordability challenge. Additionally, businesses might consider flexible work arrangements to alleviate the need for daily commuting.
The economy is all about fancy cars. They could afford it at the moment, but then later own can’t afford the monthly payments.
The rising costs of car ownership have impacted how much money is going into the economy. Spending habitats will budget to spend less money causing the broader economy to take negative impact. Business can help by increasing pay. Tax, groceries, and bills have gone up, but the rate employees are getting paid are the same.
Rising cost of car ownership has pushed inflation higher affecting the economy, this making things less affordable for consumers, businesses could introduce caps on profit margins in industries where price gouging is happening .
The rising costs of car ownership can definitely impact the economy and consumer spending. It could affect people’s ability to spend on other things. Businesses and policymakers might need to find ways to make transportation more affordable for everyone.
The rising costs of car ownership impact the broader economy and consumer spending habits because the car becomes more difficult to afford and hard to keep up with.
Businesses and policymakers can supporting and making the National Housing Trust Fund bigger to address this affordability crisis.