Since new and used cars are always very expensive, Ryan Holdsworth wants to keep his 9-year-old Chevrolet Cruze for at least four years. Reducing his car payments and overall debt is a higher priority for him than owning a new vehicle.
A 35-year-old grocer from Grand Rapids, Michigan, Holdsworth probably would have entered the vehicle market within a few years had it not been for the high cost. That’s out of the question for now.
Holdsworth has plenty of company. Americans are keeping their cars longer than ever. According to S&P Global Mobility, the average age of a passenger car on the road this year reached a record 12.5 years. Sedans like the Holdsworth are even older, averaging 13 years.6 years. The main culprit is the pandemic, which in 2020 led to a global shortage of automotive ICs, a key component that controls everything from the radio to the gas pedal and gear shifter. The shortage has drastically slowed global assembly lines, leaving new vehicles stranded on dealerships’ lots just as consumers became more eager to buy.
Prices have reached record levels. And while they’ve come down a bit, the cost of a vehicle is still very high for many Americans, especially when combined with significantly higher mortgage rates these days.According to Edmunds.com, since the pandemic began three years ago, the average new car price has risen 24% to nearly $48,000 in April. Typical interest rates on new auto loans have risen to 7% after the Federal Reserve’s aggressive rate hike series to fight inflation.