Consumers moving to more affordable cars amid rising prices, insurance costs in U.S., report finds
FILE-A price tag hangs from the rear view mirror of a car for sale at a car dealership. (Photo by Justin Sullivan/Getty Images)
Consumers are moving towards more affordable cars amid rising inflation and soaring insurance costs.
In a September report from Edmunds, 73% of consumers said that they have delayed buying a new car because of elevated prices.
And among new-car shoppers surveyed by Edmunds, 48% said they would like to spend $35,000 or less on their next vehicle. And 14% said they would like to spend $20,000 or less on their next vehicle.
FOX Business reports that the average pre-2020 car sold in the U.S. for roughly 20% less than the current 2024 average of $47,000.
Last month, AAA noted in its 2024 Your Driving Costs (YDC) study that the total cost to own and operate a new car this year is $12,297 or $1,024.71 per month, an increase of $115 from 2023.
The AAA report noted that the major reasons behind this shift are rising depreciation and finance charges, which could affect consumers' interest in purchasing a new car.
Additionally, model cars, like the Chevrolet Trax, which are below market average cost, start around $20,300 on the Chevrolet website and sales are at an all-time high, FOX Business noted, citing GM Authority.
Separately, rising auto insurance prices may also play a factor in a consumer's decision when shopping around for a car.
Citing the Bureau of Labor Statistics, Reuters reported that auto insurance premiums are now reaching a total annual increase of 22.2% in 2024. The auto insurance premium rate was only higher in the U.S. in December 1976, when the rate was 22.4%.
According to Reuters, insurance may continue to rise based on the cost associated with owning a car, like maintenance, taxes, depreciation of the car, gas prices, and insurance.