Shoppers Say They’d Pay Stupid Money for a New Car
Supply-chain issues are continuing to impact new car availability and pushing prices up, but most new-car shoppers are still willing to dig deep to get the car they want.
A new survey of 3361 respondents in August 2022 showed that on average, nearly 39% of car owners in the United States were not driving the car they wanted — and that to get the one they did want, they would be willing to pay nearly 37% over the manufacturer suggested retail price.
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This corresponds with other findings that Americans are consistently buying vehicles over MSRP. According to Kelley Blue Book, September marked a record 16th straight month that new vehicle average transaction prices were higher than recommended. The average price paid for a new car is quickly approaching $50,000. Ten years ago, it was in the low $30,000s.
And for the majority of 2022, the average price of a new car was about 10% over the sticker price, with some of the more popular models going almost as high as 25% over what the manufacturer recommended — despite that this recommendation has also been steadily climbing over the years.
Yet in Idaho, respondents said they’d be willing to pay even more to get the car they want: as much as 71% over the asking price. And while residents of other states were less prone to overspending (North and South Dakota, West Virginia, and Rhode Island were the lowest at 11%), the overall U.S.-wide average of 37% shows that dealerships still have margin to extract more dollars out of customers faced with limited availability of the cars they want.
However, there are signs that cars are finally coming back in stock and consumers are attempting to save rather than spend as inflation continues to rise and the threat of a recession looms. Additionally, automakers like GM, Ford, Hyundai, and Kia have warned they may take punitive measures against dealers applying high markups.
Unfortunately, even if car prices go down, record-high interest rates may offset the advantage. For the time being, unless you absolutely need a new ride, it’s probably best to sit tight.
Kurt Verlin was born in France and lives in the United States. Throughout his life he was always told French was the language of romance, but it was English he fell in love with. He likes cats, music, cars, 30 Rock, Formula 1, and pretending to be a race car driver in simulators; but most of all, he just likes to write about it all. See more articles by Kurt.