The average price Americans paid for a new car topped $47,000 for the first time in December. The average final transaction price last month was $47,077. The figure caps off a year of unprecedented price increases.
Accelerating Price Increases
During 2019, the price Americans paid for the average new car rose by $1,799.
In 2020, the price Americans paid for the average new car rose by $3,301.
Last year? In 2021, the price Americans paid for the average new car rose by $6,220.
Reduced supply and increased demand explain most of the problem.
The shortage initially was triggered by COVID shutdowns that took out almost three months of vehicle production. A worldwide microchip shortage hit in mid-2021, just as the economy started to get back on its feet after the first phase of the COVID-19 pandemic. Newly vaccinated Americans began spending again, and many sought out new cars. But manufacturers couldn’t find the microprocessors they needed to keep up with demand.