Modest-income buyers being priced out of new-vehicle market

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Two years after the pandemic hit the economy, America’s auto market looks something like this: Prices are up. Supply is down. And gasoline costs drastically more. The result? A widening disparity between the richest buyers and everyone else.

Best of all, with gasoline having scaled $4 a gallon nationally, she’s enjoying superior fuel efficiency.

And that’s despite a whopping 22% jump in the average price of a new car since the pandemic struck two years ago — to more than $46,000, as of December. Left largely out of that pool, buyers of more modest means have been vying for the most fuel-efficient used vehicles — and forcing up their prices. At auctions where dealers buy many of their vehicles, the average price of a 2-to-8-year-old compact car rose 1.1% during the past three weeks to an average of $12,560. That’s an annual rate of nearly 20%. The price of older cars is up even more, according to data compiled by Black Book, which monitors such prices.

Behind that trend lies an economic reality: Americans as a whole have less cash to spend. Although America’s job market is robust and many people have received pay raises in recent months, the acceleration of inflation has more than wiped out those gains in most cases., the fastest such pace in four decades. In addition, stimulus checks and other federal aid that most households received after the pandemic have long since expired.

 

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