New car prices
Date posted: June 20, 2011
Consumers have complained about gas and food prices for a while. But now there may be something else we can add to the list — car prices. N.C. State University economist Mike Walden explains why.
“Well, they’re up about $1,000 … over last year. In fact, taking account of incentives, the average price of a new car is around $30,000. And that … is $1,000 over last year.
“Several factors, I think, are at work. Certainly, the earthquake in Japan has limited supplies for some models. That’s at work. Also, because of the focus on fuel economy, producers of smaller cars are adding more features like heated seats. And obviously that’s going to increase the price.
“Many companies are coming out with new models, and that newness often means somewhat higher prices as people are looking for something different.
“And then lastly … and this may be the most important, we are seeing a modestly improving economy. So, we’re seeing more people willing to go out and buy cars. And we have a lot of what economists call pent-up demand over the last couple of years. People wanted a car, new car, didn’t buy. We’re now seeing that come forth and that’s also putting some upward pressure on prices.”
Category: Economic Perspective