Average new car price crosses $40,000 in 2020 and that's nuts
The latest analysis shows new car buyers not only paid more, but coughed up larger down payments to make a purchase happen.
It all started with Gran Turismo. From those early PlayStation days, Sean was drawn to anything with four wheels. Prior to joining the Roadshow team, he was a freelance contributor for Motor Authority, The Car Connection and Green Car Reports. As for what's in the garage, Sean owns a 2016 Chevrolet SS, and yes, it has Holden badges.
Last year was... something. Amid everything that happened in 2020, car buyers and the auto industry also created a new record, though it's not really one to celebrate. The average new car price paid in December 2020 and the fourth quarter of last year crossed over $40,000 for the first time. Forty thousand dollars, guys.
Edmunds released its quarterly analysis of car buying trends last week that showed the average amount borrowed for a new car in the fourth quarter was $35,373, and buyers brought an average down payment of $4,734 to the table. Combine them and you get an average new car price of $40,107. On average, new car buyers left dealerships (or signed papers from home) having agreed to a car payment of $581 per month at a 4.6% APR over 70 months.
Although new car prices trended in this direction for awhile, Edmunds said December is likely a little bit of an outlier when it comes to pushing the figures this high. The final month of the year is historically a big month for luxury car brands moving old model years to make room for new cars. The more luxury cars moved, the more weight they add to average figures. So, we may see some reprieve from a $40,000 average price in early 2021, but the long-term shift to SUVs and pickup trucks doesn't help, either. Edmunds noted the trend is alive and well, and new car buyers are increasingly looking for more features and equipment.
All the while, we continue to also see a massive economic divide. Jessica Caldwell, Edmunds' executive director of insights, said those with the purchasing power are definitely not shying away from buying a new car even amid an overall downturn.
"It might seem at odds with unemployment levels and the harsh financial conditions that so many Americans are finding themselves in right now, but the consumers who are buying new cars during the pandemic are clearly on the other side of the economic divide," she said. "They're likely qualifying for the lowest promotional rates and feeling secure enough to put down more money to get the bigger vehicles and features that they want."
That leaves a whole host of buyers out of the market, or pushes them into the increasingly popular used-car market. There's a ready supply of off-lease vehicles with a host of modern equipment returned to dealers, ripe for far better deals. The average price of a used vehicle in the last quarter of 2020 rang in at $27,689, which includes an average down payment of $3,283.