Well, we saw this coming but now it’s a reality: new car shoppers are getting squeezed big time. If you haven’t noticed, vehicle prices have been inching up year after year, $1,000 here, $1,600 there, and now a new Kia Sedona starts at $27,000.
That wasn’t a problem, automakers reasoned, because with low interest rates and banks gleefully offering loan terms at 72 months or longer, everything was fine, right? Wrong.
Interest rates have been on the rise, effectively biting down the buying power of car shoppers. According to a recent Bloomberg report, they’re almost to the point where buyers in large numbers won’t even look at new vehicles because of the extreme expense.
Wages in the U.S. have largely stayed stagnant for far too long. It’s like the big wigs in the auto industry didn’t get the memo from the last election: people are mad. Instead, automakers keep walking prices up while they fret over shoving the latest tech like wireless charging pads or high-speed data connectivity hardware in cars. More complex designs to lower emissions and raise fuel efficiency aren’t helping, either.
On those last two points, the Bloomberg report touches on. If people keep older cars running and don’t buy anything new, we’ll have household resources flowing into costs at the pump, instead of areas of the economy that could really benefit society.
The burden of this problem does and should rest on automakers. They need to realize shoppers will appreciate something practical that doesn’t cost an arm and a leg, but that’s still safe and fuel efficient. All that walnut trim won’t look so nice as your car gets hauled away by the repo man.