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Insight of the Day: Beyond Reach: How new car prices are leaving consumers behind

The Issue:

  • Skyrocketing Prices:  New car prices have risen dramatically in the past 5 years, outpacing wage growth and creating affordability issues for many consumers.

  • Consumer Pushback: Buyers are deferring purchases, turning to the used market, or keeping current cars longer, reflecting financial constraints rather than a lack of desire.

Historical Echoes:

  • The 1970s & 80s:  A similar situation with high unemployment, inflation, and fuel shortages opened the door to affordable, efficient Japanese imports.

  • Today's Replay:  Rising prices and stagnating wages could present an opportunity for competitive imports, this time potentially including Chinese-made vehicles.

Challenges for Dealerships:

  • Shrinking Customer Base: Fewer buyers can afford new cars, putting pressure on dealerships to maintain sales volume.

  • New Competition:  Potential entry of less expensive imports, especially EVs,  could further complicate the market for dealerships.

  • Need to Adapt: Dealerships must cater to more price-conscious buyers, bolster pre-owned inventory, and consider diversifying their car line offerings.

Adapting to the New Reality:

  • Understand Changing Needs:  Dealers must focus on meeting consumers where they are financially and offer flexible options.

  • Value & Customer Service:  Emphasize the value of certified pre-owned vehicles and build strong customer relationships to foster loyalty.

  • Embrace Digital:  Enhance the online car buying experience to meet the evolving preferences of customers.

The Road Ahead:

  • Uncertain but Opportunity-Filled:  The automotive industry faces challenges, but dealerships that adapt, innovate, and focus on the customer experience will be best positioned for the future.


  • Potential for Import Surge:  If competitive imports fill the gap left by expensive domestic models, the US market landscape could shift significantly.

  • Increased Used Car Demand:  The used market will likely remain strong as consumers seek affordable alternatives to new cars.

  • Pressure on Dealers to Innovate: Dealerships must find new ways to attract customers, compete with imports, and prioritize customer experience.

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