In a day and age where it's easy to spec out a $28,000 Ford Focus or a $70,000+ Ram pickup, there's no doubting that new vehicle prices have gotten quite high. According to Ward's Auto, more and more analysts fear that the trend toward higher transaction prices may negatively affect an auto industry that is still on the rebound.

Since 2008, Ward's notes that the average new-car transaction price has increased by more than $3,000 – 13 percent in the last year alone – to a current price of $28,831. To help make these higher prices less of a burden, almost a third of all new loans are for 72 months or longer, but fortunately for consumers, interest rates are at record lows right now. The article points out that higher prices and longer-term loans could lead to more owners finding out they have negative equity when it's time to trade their vehicle in, a worrying thought that suggests the real negative impact of this trend may be deferred. For the automakers, on the other hand, rising transaction prices are likely a welcome sign – especially when factoring in that incentive spending is down as well.


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    • 1 Second Ago
  • 73 Comments
      Cubanaso
      • 1 Year Ago
      There is no doubt that the ever stagnant wages and ever higher prices for all goods and services let alone cars will have a serious consequence in due time. Unchecked greed will reap a terriable harvest.
      foxtrot685
      • 1 Year Ago
      This isnt a reflection of the auto makers\' CEO\'s and product directors calling each other in the middle of the night going: \"Hey... wake up! I just had like the best idea ever. How bout we just jack car prices up for no good reason?!?! This is gunna be so EEPPPPIIIICCCCCCCCCCCC!!!!!!\" This is a reflection of the market demanding more content in their vehicles than ever before. Want a Ford Focus that can park itself with a huge screen stuck in the dash? Fine, just be prepared to pay for it. Even if you dont select this option on YOUR Focus, Ford still has to design a vehicle that can support this technology across the entire lineup, which saves them money and resources. As such, even the base Focus\' price will climb. I also agree that while transaction prices are higher, cars are actually cheaper. Lets look at the Focus again... in 2005-2007 it was possible to equip a Focus ST with the 2.3L Duratec and 5-speed manual up to about $23,000. In 2013, that same $23,000 will get you a Focus SE with way more features and technology. While $23,000 wont get you a fully loaded Focus like it did in 05-07, it will get you more car than it did in 05-07. Let an automaker try to make a compact sedan like they used to 10 years ago... the automotive magazines and blogs (just like this one) will tear that car to peices. \"Wheres my navigation? Wait, you mean I have to CHECK my blindspots?! The car doesn\'t do it for me??? Stick a metal key in an ignition??? WHATS THIS IGNITION YOU SPEAK OF?!?!?!\" Get used to high prices and 72-month loans...
        • 1 Year Ago
        @foxtrot685
        [blocked]
      William J. Sisco
      • 1 Year Ago
      Interesting, 3 months ago I bought a 2012 (new) Mazda 2 w/auto pw, pl air and the usual items. Read recently that Mazda may discontinue this car in USA due to low/slow sales. While it is basically a Ford Fiesta with less HP, it handles much better then Fiesta and, oh BTW, I paid $13,000 out the door with tax. I guess most people do not like to talk about how little their car cost. I think the sticker was around 15k.
      Farmboy
      • 1 Year Ago
      I would like to know where do we place the blame (and possibly distribute). Do we place it on the auto industry for having pricey vehicles filled with options? The Feds for regulations on what needs to be equipped to be deemed roadworthy? The dealers who are known to increase price, if a car is seen as desired, like a high end truck? What about the consumer who pays for it? There's no doubt car prices are increasing. It's an annual thing. Whether it's a couple hundred bucks or a couple thousand. It happens do to how our economy works and concerns of manufacturing and sale, through many variables, which could be a monster list. And where will we see the crimps on the industry? Will it be longer terms of ownership? Or will it be competition with the used car market? Hell, mass transit and traveling as a pedestrian via foot or bike could also factor in, with gas prices always a dark cloud (it's $4.25 in central Indiana). The rising cost of transaction are response to the rising sales, which is simple economics. It won't be hard to adjust what amount and what specifically makers are selling if the sales lose momentum. I think the industry rebound will maintain health though and not be truly affected by this. But maybe I'm just a little too faithful.
        mawhalen53
        • 1 Year Ago
        @Farmboy
        Good post. It is a complex issue, and it really extends beyond the automotive industry to the general economic climate of the country.
        rlog100
        • 1 Year Ago
        @Farmboy
        A large part is regulatory compliance. The \'water carborator\' theory that automakers can make cheap cars that are super safe with no emissions and run on water but simply choose not to do so, is ridiculous. You would have to believe the owners of GM would rather loose their investment in the company, the exectives lose their jobs so that GM would go into bankruptcy rather than bring out the \'water carburators\' or whatever magic dust they are suppose to be concealing. Government regulations translate to cost to the consumer, period.
      Polly Prissy Pants
      • 1 Year Ago
      Rising vehicle prices? Cars are cheaper than ever. In 1983 we bought a new Honda Accord for $10,000 ($23,000 in todays dollars). Today you can get a comparably equipped, American made Accord that is light years bigger, better and safer for less. And if you want the same car that '83 Accord was you'd probably pay barely over half for it today. Sure, you can choose to pay more if you want, but pound for pound cars are getting cheaper every day.
        Larry Thompson
        • 3 Months Ago
        @Polly Prissy Pants

        That may be true if wages kept up but you are obviously one of the privileged with your mentality 30 years from now we will be paying 1,000,000 dollars for the same car only with a lot more crap . They use to tell me this about computers . when PC prices refused to drop below 1000 dollars Canadian . But lets face it you can now get a smart phone that is a lot better than any computer back in 83 for next to nothing from your cell provider . We can only hope that  the same will happen to the auto industry . I don't believe in Inflation it is just used by the greedy upper class to increase the gap between them and the working poor . May the upper class be forced to stand in food lines and get a dose of reality

        Larry Thompson

      Drakkon
      • 1 Year Ago
      My wife hates it when I wear heels that tall
      CarNutMike
      • 1 Year Ago
      This is a weak interpretation of a weak source. Making any conclusion based on average transaction price is meaningless without correcting for vehicle type. The fact that people are buying more expensive cars does NOT necessarily mean that cars are more expensive. In fact, the Ward's article actually concedes that current consumers are paying more *voluntarily* for modern electronic options. In addition, truck sales (typically more expensive) have rebounded this year.
      Cruising
      • 1 Year Ago
      Base model pricing for any vehicle is rather impressive these days considering what you get versuses a few decades ago. Go to the lots where the hell is that car? Everyone always talks about base model pricing but in reality those are rare cars to come by. Dealers don't like to keep them in stock and I suppose many consumers want more and more content but if I'm going to spend $20k for a midsize sedan the base model is just fine.
      andrew
      • 1 Year Ago
      What a dick bag
      All_mine
      • 1 Year Ago
      If you have amazing credit, then why not take a loan out for as long as possible? I have a friend that purchased a brand new Camry with 0% and 60 months. When he said he was going to go ahead and pay it off in 1 year just because he said he had the money, I told him that it was a dumb idea. The longer the loan, the less you are paying in the long term due to paying with money that is worth less in the future. So,with that being said, sometimes a longer loan is actually more beneficial to customers.
        clquake
        • 1 Year Ago
        @All_mine
        The longer the loan, the more interest you have to pay, and generally, the higher the interest rate due to a higher risk of default. Your friend has the right idea, you seem to be backwards in your line of thinking. I'm in the finance business if you're wondering.
          gazingwa
          • 1 Year Ago
          @clquake
          clquake do you have brain damage? He said his friend's loan was 0%, you don't pay anything 0% off until you have to. You pay off any debt that produces interest or you invest the extra money. Hell even in a CD or savings account 1% rate of return is better then paying off a 0%(no interest) loan. Another thing, the value of money decreases over time due to inflation(which is partly why car prices rise) A dollar today is worth 5-15% less in 5 years. Don't try to act like a financial expert if you don't know what you are talking about.
        Dump
        • 1 Year Ago
        @All_mine
        Why'd the guy get a 5yr loan instead of maybe a 3 yr loan? Was the 0% interest offered on the 5yr term? Anyhoo....if he's got the coin to pay off the 0% loan in a year, sobeit. Get it paid, then he completely owns it & can trade or sell whenever. Cool.
      Scooter
      • 1 Year Ago
      I prefer to leave the "new car" industry to the suckers. I'll buy a certified used car after they throw away $10,000 in value. I have to say that the demand for amenities is probably to blame. Amenities are already marked up, but people demand more and more in their basic cars, so they have to accept the market prices for the stuff they want. New car shopping can be astonishingly expensive. You go into a KIA lot expecting to find a $20,000 Optima, and instead find a lot full of $32,000-$37,000 price KIAs. Your almost always upside down on your new car loan for many, many years. In a generation where cars improves so rapidly, its difficult to want to keep a car for 10 years now.
        Vien Huynh
        • 1 Year Ago
        @Scooter
        I understand your mentality of avoiding depreciation hit, but there are people want a reliable transportation and a peace of mind with full warranty and such. I am the type of buying something new and use till the thing falling apart :). Ha, if I can afford the car in new condition comfortably, WHY NOT?
          Scooter
          • 1 Year Ago
          @Vien Huynh
          Completely valid, if your buying a new car, you should probably be the type of person to keep it well past pay off to actually get your moneys worth. Though many people these days are buying new cars only to trade them in mid-way on the loan. Many people are losing thousands on the initial investment and then to add thousands worth of difference in trade in value to amount still owed stacked on to a purchase of another new car. Its how my grandma ended up with a $30,000 mid trim Ford Focus. Her dealer took advantage of her senior age and convinced her trading up was wise.
          Bernard
          • 1 Year Ago
          @Vien Huynh
          Lightly used cars that are well taken care of are reliable. Anything (excluding luxury and exotics) built after 2000 will likely last 100k miles and 200k miles if it's well taken care of. Of course if it's abused then stay away.
        • 1 Year Ago
        @Scooter
        [blocked]
          Scooter
          • 1 Year Ago
          Age 25, perfect credit, two late model cars, live with partner with a $82,000 household income. What do you make, what do you have?
          Scooter
          • 1 Year Ago
          No, I know how the internet works, your abs are ripped, your dating a supermodel, make $200,000 a year, and blaze the down the highway in a high end sports car. In my defense, you took a purely subjective, and somewhat factual post (mine) and answered it with a targeted insult implying I am poor, ignorant and/or stupid. If you want to disagree with a post that's fine, but if you want to accuse me of not having a sense of humor, and also insult my financial status by implying I can't afford new cars, you should check yourself at the door. Your post also displays your ignorance that tossing around money and losing thousands of dollars on a poor investment ( new cars) is "okay" if you make "lots" of money. Not everyone with money thinks throwing it in the trash is a sign of success. Its a sign of stupidity.
          Scooter
          • 1 Year Ago
          If you didn't know or didn't care, then why venture into the unknown territory to begin with? Your back peddling with excuses in the form of what you think is logic. Next time you could just comment on the subject matter and not take jabs at users personal situations and call it "humor".
          • 1 Year Ago
          [blocked]
          clquake
          • 1 Year Ago
          Most households in the northeast make six figures, you must live in an area where the standard of living is much much much much lower. $80K (for 2?) doesn't get much up here.
          • 1 Year Ago
          [blocked]
          tinted up
          • 1 Year Ago
          I am 25 and pull more than that alone chudlet, stfu about how much you make.
        Bernard
        • 1 Year Ago
        @Scooter
        My rule is: 3 years old and under 40k miles is as good as new. I might buy my dream car new (Corvette), but that's it.
          gazingwa
          • 1 Year Ago
          @Bernard
          The problem is 3 ys old and under 40k miles doesn't cost much less than new. Have you seen used car prices lately? I used to do that but when they are asking almost as much as a new car for a 2yo, why buy used? Say your 40,000 mile car costs 5k less than a new car(sadly this is about this difference right now). The new car is 25k, expected life is 200,000. Used car costs you 12.5c a mile, new car costs you...... 12.5c a mile. The market is screwed up right now. Why would I pay the same per mile and not drive new so I have more of those miles under warranty and know exactly what maintenance has been done to my car.
      RobbieAG
      • 1 Year Ago
      The more content government mandates in cars, the higher prices will go. Safety and mpg regulations have a cost. No doubt this is also partly due to the rising cost of commodities (inflation based on money printing).
        knightrider_6
        • 1 Year Ago
        @RobbieAG
        You can buy a brand new car that meet all efficiency and safety regulations for $10K. And yet, people pay an average of $30k for a new car.
          RobbieAG
          • 1 Year Ago
          @knightrider_6
          That may have been true a few years ago. Now it's close to 13k and will only go up from here. http://www.usatoday.com/story/money/cars/2013/04/24/cheapest-cars-price-mpg-disappointment-nissan-versa-smart/2110083/
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