The car prices are too damn high

If the current car market was a student in an 1880s-era one-room schoolhouse, it’d be walking towards the corner containing a dunce cap and stool – because it appears to be heading for some trouble. Both interest rates and auto prices have increased significantly since the pandemic, to the point where they could soon become unsustainable, the WSJ reports.

• Five years ago, there were dozens of new car models retailing for less than $20,000. In 2023, there’s only one: the Mitsubishi Mirage hatchback.
• Today’s average new car loan has a monthly payment north of $750 and an interest rate of 9.5%, compared to $554 and < 4% in October 2019. Paying off a new car at current prices now demands 42 weeks of income for the average American, up from around 33 before the pandemic.

💥 The sharp increase in prices and high interest rates are proving to be problematic for many buyers. Auto loan delinquencies among those with subpar credit are rising, outpacing even their Great Recession peak, per an S&P Global analysis published last week that called the data “ominous.” Lenders owned by auto manufacturers, also known as "captives" (GM Financial, Stellantis Financial, etc.), are responsible for 44% of new car loans, far outpacing banks (26%) and credit unions (24%).