I sat and pondered over this AM....where the hell did car-prices go 'crazy'? I remember in 2012....a general trend....that you could still go and find new cars for $30k and do a 48-month purchase deal that made sense.
So I asked Grok for the story (AI). Grok said:
"Car prices in the United States began to escalate significantly in early 2021, driven primarily by the COVID-19 pandemic's impact on global supply chains. Factory shutdowns and a severe semiconductor chip shortage reduced new vehicle production, while pent-up consumer demand surged as economies reopened. This imbalance caused average new car transaction prices to climb from around $37,000 in late 2020 to over $47,000 by late 2021, a roughly 27% increase. Used car prices followed suit, jumping nearly 60% from June 2020 to January 2022, peaking at over $31,000 in April 2022."
Yep....this goes to Covid, and the 2020/2021 era.
I should add....Covid-era-inflation also started to play a role....so you could add another $5k to $7k to this problem.
Last year....the average base-model of a US car...ran to around $48k (new). For a used-car? For a 3-to-4 year old car....up around $27k.
Once you added the extras? Well...you start talking about $10k to $20k.
Trying to blame Trump or Biden? That's a goofy position to take.
Moving the four-year loan onto six or eight years? You just compounded the chip and inflation mess...adding another layer of banking cost.
Fixing this? You'd have to solve the chip-mess (lessening the cost), and start asking for base-model vehicles....then start looking for a path back to the 4-year loan business.
My humble 'bet'? A quarter of all present car companies will cease to exist in two years. And we will reach a point where most people are driving a 7-to-15 year old car.