You spend a lot. And you may be willing to forego the dealer “experience”
By Gary S. Vasilash
According to the most-recent Cox Automotive/Moody’s Analytics Vehicle Affordability Index, the number of median weeks of income to buy a new vehicle is 37.
37 weeks to buy a new vehicle.
That’s the greatest number of weeks since they started measuring it back in 2012.
The firms found a trifecta of things contributing to this situation:
- Vehicle prices increased
- OEMs and dealers are putting less cash on the hood
- Median incomes fell
It would have been worse, apparently. Financing rates decreased, so if that didn’t happen, there would have been higher monthly payments.
In May, the most recent month with figures, the average transaction price that people were paying for a new vehicle was $41,263 according to Kelley Blue Book.
Now admittedly that doesn’t mean that everyone pays that much. It wraps in figures for OEMs from Mitsubishi to Mercedes, from Chevy to Porsche. Cars, trucks, SUVs.
But still, a lot of money.
A lot of weeks to earn that money.
All that said, J.D. Power has announced that predicated on its analysis of the usage of OEM websites, 49% of vehicle shoppers are willing to purchase a new vehicle online.
This is an increase of 11% from 18 months ago—about the time that the effects of the pandemic kicked in in the U.S. market.
So what’s behind this:
- Is it that people are more comfortable shopping for things online, as many of them have done during the past 18 months for everything from groceries to appliances?
- Are more people simply questioning the visit to a dealer as being a necessity?
- Is this a case where people go to a dealership, take the test drive, and then go home and search for a better deal?
Whatever the case, it is clear that there is a shift in how vehicles are going to be bought. And it is also clear that there is a shift in what people are willing to pay for vehicles.
Consider this: If you bought a new vehicle the first week of January this year, you wouldn’t pay it off until the week of September 10.