Reports Show Average Car Price on the Rise in America
Throughout the year, it seems like we’ve been hearing mostly positive news from the auto industry. An uptick in consumers buying new cars is a great signal that the American economy is finally, truly in recovery mode. But it’s not just that they are buying more cars. According to data from TrueCar, Americans are spending more money per car than ever before.
How Much Money is “More Money”?
Looking at the cold hard data, this increase translates to a projected 16.4 million vehicles purchased in 2014, which is up 6% from last year, and would make 2014 the most successful year for the automotive industry since 2006—well before the bottom fell out of the economy. Additionally, the annual revenue for US car sales has soared 61% from 2009, with the auto industry currently reigning in $522 billion in profits. Divided between the number of buyers, this means that the average car price in the US has risen from $31,077 to $31,798.
Is This Completely Accurate?
But when we look at this data, how can we be sure that it paints an accurate picture of the US auto industry? After all, there are certain factors that skew the data, such as an uptick in wealthy Americans buying high-end vehicles that retail at around $1 million. The very top of the car market has grown in recent years, and when comparing one driver who purchases a $1 million Ferrari to your average American and his $25,000 Prius, it’s easy to see how one can cancel out the other.
What Else is Contributing to a Lower Average Car Price?
Other factors at play include lower interest rates, making car loans more affordable; more tech-savvy standard features available in the majority of cars—even entry-level models; and the American’s tendency to prefer larger cars, which naturally sell for more. But even with all these factors, a $522 billion increase in profits from the same time five years ago is nothing to sneeze at.
We can only keep our fingers crossed that the automotive industry will continue to grow and be successful, as well as the other industries that contribute towards a healthy economy.