[CNBCで英語学習！]新車購入費用はなぜ高騰しているのか？[8分動画]

Car payments have reached record highs in recent years, and Americans are feeling the pinch. The average payment on a new vehicle rose 40% between April 2019 and April 2024. Some people will look at this and they will say, are you kidding me? I mean, that's basically a house payment for a lot of people. You know, we always had this idea that a new vehicle was something that was attainable for every American. We're clearly we've moved away from that premise. Blame it on high interest rates and high vehicle prices caused by pandemic era shortages.

The good news payments have dropped a bit and are expected to fall further. We've reached a peak. We've turned a corner. Uh, however you want to say it, the affordability issue is going to get better. The relief may only be short lived. Longer term, industry insiders have serious questions about the direction the auto market is headed in. Vehicles were growing more expensive prior to the pandemic, as automakers shifted away from pumping out cars for the mainstream toward a strategy of selling fewer, pricier vehicles that pulled in more profits. Many in the industry say that might be here to stay, meaning a lot of ordinary Americans will be locked out.

Here are a few numbers that illustrate how tough it has become. Just ten years ago, car payments were nearly half of what they are today. The average is $760 a month right now, but quite a few customers pay more than that. A near-record number are paying over 1000 a month and have been for four straight quarters. The idea you're going to pay, you know, seven, $800 a month for the next six years. I mean, it's just it just sounds crazy for a depreciating asset. It is. Almost like borderline. Disturbing how acclimated everyone has gotten to the idea that, you know what, I've got 700. You know, I've got 1000. I've got all these dollar figures that other people say, hey, that's my rent. Hey, that's my mortgage from ten years ago.

So payments are high. And it's not just because of inflation. Car payments rose twice as much as overall inflation from 2019 to 2024. Two things drove this high prices and high interest rates. High prices hit the used vehicle market first, where dealers can pretty much charge whatever they can get for a car. But soon they made their way into the new car market, which was hit by a severe shortage of new vehicles and parts. As manufacturing shut down around the world during the Covid pandemic, shortages popped up everywhere. First of cars in 2020, then of parts like semiconductors in 2021 and 2022. With supply so tight and demand so high, dealers and automakers didn't need to offer any incentives. Charging at or above MSRP was common. Anyone who bought a car pretty much at any point in the last four years paid historically high prices. Those same expensive vehicles, though, live in the segments that today are experiencing the greatest amount of depreciation. So you might have somebody who really scored two years ago, they went to a dealership, you know, they got a fantastic vehicle, good price, but now they've come back and they didn't realize that the rest of the market has evolved.

And then of course there are interest rates. Anyone shopping for a new car is going to get a fair amount of sticker shock when they see the price of the car. Along with that higher interest rate. The Federal Reserve set its target interest rate at five and a quarter to 5.5% in July 2023. That isn't the actual rate someone will pay for a car loan or mortgage, but it does affect the overall cost of borrowing. Today, auto loan rates are just above 7%. In March 2022, before the fed started raising rates, they were closer to 4%. That's a significant jump. Not only are people paying more in there for their auto loan, but they're also paying more for the price of the car. So that combined higher prices plus higher loan rates makes car affordability particularly challenging for a lot of people trying to buy a car these days.

In addition, an alarming trend has taken root within a segment of borrowers. Those who decide to get a new car when the one they're driving is worth less than the money they owe on it. Something called negative equity. The average amount on those trade ins hit an all time high in the first quarter of 2024. Almost 25% of purchases were made by customers with negative equity, nearly 10% more than just a couple years earlier. Rolling that negative equity into a new loan comes with bigger payments at higher interest rates over longer terms, and trade ins involving negative equity have only gotten more expensive over time. What makes it worse, though, is you probably got a decent loan 2 or 3 years ago, right? So if you do have negative equity and your roll into the next payment, it's not like you're even getting more favorable terms. Like unless you get a subvented April from the automaker, you're really compounding this problem because again, at seven 8%, that first month payment, that first year's payments, a lot of that's interest. You're not going to dig yourself out of this hole.

And finally, consumers want fancier cars. And carmakers have capitalized on that. Because structurally, the industry has been headed to this direction for many, many years. They've been abandoning many of the lower price points. So it's just all kind of going into the soup to kind of lead vehicle prices to be going up just a little bit. Good news for the consumer is vehicle prices have come down. Us production is back up, there are more cars on dealer lots and incentives rose rapidly from mid 2023 to 2024. You should be able to get a better deal now than you were, uh, say 12, 18 months ago. So there's some light at the end of the tunnel. But the payments that people are locked in on, on those higher priced vehicles aren't going away anytime soon. Even if interest rates were to be lowered, there is a six month lag. However, in the meantime, dealers and automakers will likely continue to offer incentives that will bring those prices down. But different shoppers are apt to see different results based on their own financial situations or the types or brands of cars they are buying. And so there are still deals to be had. You just got to do a little bit more shopping, a little bit more homework, you know, to find the manufacturers that really are trying to, uh, to compete quite aggressively. Consumers with higher credit scores may be able to secure better loan terms. So if you have excellent credit, you're probably going to do better than that standard 7% new car loan rate.

Over the longer term, larger forces in the auto industry could continue to push prices upward. Just a decade ago, the average transaction price was $32,386, which was itself a record high. As of April 2024, average transaction prices were $48,510. Sticker prices are still rising, as are the prices dealers are paying. Automakers vehicles themselves are not getting cheaper. In addition, the white House raised tariffs on EVs from China to 100% of the sticker price precisely in order to hold off a flood of cheaper cars from the country. These forces combined lead some in the auto industry to wonder whether volumes will remain lower for the foreseeable future, as the market continues to shift towards serving upscale customers and charging upscale prices. Are we going to get back to that 17 million new vehicle sales that we saw for five years in a row from 2014 to 2019, or our interest rates and high prices going to keep the equilibrium level lower than it was previously. So our automaker is going to keep getting more profit per vehicle, or are they going to try and gain market share and try and just move as many vehicles as possible?