Autotrader.com executive editor Brian Moody argues that declining car sales combined with rising inventories could drive prices down.
More and more Americans are behind on their car payments. US economy High car prices and persistent inflation are straining household budgets.
Car foreclosures plummeted early in the pandemic when the government sent stimulus checks to millions of Americans.But they’ve gotten progressively more expensive used and new cars Similarly, consumers were forced to take out larger loans.
According to Fitch Ratings, the percentage of subprime car borrowers who were 60 days or more late on bill payments rose to 5.67% in December, up from a seven-year low of 2.58% in April 2021. Increased. This marks the highest percentage of Americans struggling to pay for their car since the 2008 financial crisis.
Retail sales fall 1.1% in December as high inflation weighs on Americans
Rapidly rising interest rates are exacerbating the pain from rising car prices. (Kena Betancur/VIEWpress/Getty Images)
Second-hand and new car prices soared last year due to shortages of semiconductors, etc. Disruption due to COVID-19 in a global supply chain. Although production volumes fell, consumer demand remained strong, driving prices higher.
Prices have started to drop towards the end of 2022, but the average new car price is still near $50,000, a record.
rapidly rising interest rates It made the pain of rising car prices even worse.
Average interest rates on new auto loans jumped to 8.02% in December, up from 5.15% a year ago, according to Cox Automotive. This, combined with soaring stick prices, has pushed new car affordability to his 2022 lows.
Used and new car prices surged last year as a result of semiconductor shortages and other COVID-19 disruptions to global supply chains. (AP Photo/Paul Sancya / AP Newsroom)
For many Americans, rising interest rates and high car prices have pushed monthly payments to over $1,000.
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In fact, according to data from Edmunds.com, an online resource for car inventory and information, the percentage of consumers spending $1,000 or more per month for a car hit a record high in the last three months of 2022. About 16% of the consumer who financed a new car in the fourth quarter got paid that much, up from 10.5% of him a year ago.
This also poses the threat of problems in the auto industry if consumers are unable to repay their loans.
