Cars that cost less than $30,000 make up just 8 percent of the market, up from 38 percent before the pandemic.
According to data from the CoPilot car buying app, cited by CNBCpricey SUVs and trucks are in high demand, prompting automakers to continue updating their lineups and cutting back on more affordable models.
Not only are new car prices near their all-time high, but the interest rate to finance a purchase is skyrocketing as well.
“It’s the least affordable car market in modern history,” CoPilot CEO Pat Ryan told the outlet.
The median cost of a new car in May, according to Edmunds, was $47,892, up from $37,000 in 2019.
The average cost of a new car in May, according to Edmunds, was $47,892, up from about $37,000 in 2019.
Cars that cost less than $30,000 make up just 8 percent of the market, up from 38 percent before the pandemic.
According to the auto buying website, 10 percent of all vehicles sold now cost more than $70,000, up 3 percent from five years ago.
And just 0.3 percent of new vehicles cost less than $20,000, up from 8 percent five years ago.
Ivan Drury, Edmunds chief information officer, told the outlet how consumer tastes have shifted toward more luxurious vehicles with high-tech features like touchscreens, heated and cooled seats, and 360-degree cameras.
In response to this demand, dealerships began stocking up on more expensive cars, and automakers downsized cheaper models.
“It makes sense to keep increasing the price to offer more features and increase the size of the vehicle with each redesign,” he said.
High interest rates also continue to raise costs for those financing a car purchase.
Despite the Federal Reserve pausing last month on its back-to-back interest rate hikes, the cost of financing a vehicle remains at an all-time high.
According to Edmunds, average monthly payments hit a record $733 in the second quarter of this year.
The share of customers who financed a car costing more than $1,000 a month also shot up to an all-time high of 17.1 percent.
“The double whammy of relentlessly high vehicle prices and overwhelming borrowing costs presents significant challenges for buyers in today’s auto market,” said Drury.
“The Federal Reserve’s recent pause on interest rate hikes unfortunately didn’t offer much relief to consumers, and signs of further increases later this year mean auto loan rates may even continue to rise.”
Drivers looking to buy a used car as a way to avoid high prices are also in for a nasty surprise.
However, in some good news, gasoline prices have plummeted since last year.
High interest rates also continue to raise costs for those financing a car purchase.
According to the most recent data from Co-pilotThe typical price of a used car has risen $1,693, nearly 6 percent, since February.
In May, the average price was $32,113, marking the fourth consecutive month of price increases.
Auto insurance costs have also skyrocketed this year, causing drivers even more pain. In the year through May, the typical auto insurance bill rose 17.1 percent, according to Consumer Price Index data released last month.
However, in some good news, gasoline prices have plummeted since last year. According to the AA, gasoline prices fell to $3.55 a gallon on Thursday, compared with $4.87 in the same period last year.
It marked a drop of $1.33, or 27 percent, in 12 months, according to the US Energy Information Administration (EIA).
