Boyden Gray PLLC partner Michael Buschbacher discusses concerns of an electric vehicle mandate on ‘The Bottom Line.’
A growing number of affordable cars are hitting the American market, with the average car cost in the U.S. feeling seemingly out-of-reach for most consumers as inflation remains stubborn.
The average pre-2020 car sold in America for around 20% less than the current 2024 average of $47,000.Â
American consumers are turning from luxury models toward more affordable cars when other costs of living like groceries and rent are still painfully high.
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GOP running mate and Ohio Senator JD Vance claimed that inflation is behind the price surge during a campaign rally in Michigan over the summer, saying “thanks to Kamala Harris’ spending policies, the average new car costs nearly $50,000 a year.”
Data recently released from Edmunds paints a different picture:Â among new-car shoppers surveyed, 48% shared they would prefer their car to cost $35,000 or less, and another 14% reported a budget cap of $20,000 for their car purchase.
The all-new 2024 Chevrolet Trax on display at the 2022 Los Angeles Auto Show in Los Angeles, California on November 17, 2022. (Frederic J. Brown / AFP via Getty Images / Getty Images)
Models like the Chevrolet Trax, which are below market average cost, start around $20,300 per the Chevrolet website and sales are at an all-time high according to GM Authority.
A September release from the AAA revealed that there has been a $115/month jump in the cost on average of owning a car in America, citing their “Your Driving Cost (YDC)” at $12,297 or $1,024.71 monthly.
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Insurance costs are also higher: according to reporting from Reuters using data from the Bureau of Labor Statistics, auto insurance premiums are now reaching a total annual gain of 22.2% in 2024. The auto insurance premium rate was only higher in the U.S. in December 1976, when it was 22.4%.Â
Auto insurance rates grew 50% from the beginning of 2021, when inflation took off under the Biden administration.
“We’re hearing from a number of shoppers that they’re declining to buy a car – or returning one – because they can afford the car, but not the insurance for it,” said Kelley Blue Book senior editor Sean Tucker to Reuters.
A Kia Corp. EV3 electric vehicle during a media preview in Seoul, South Korea, on Wednesday, May 22, 2024. Kia’s new electric compact sport utility vehicle, the EV3, will be available in South Korea from July and then in Europe in late 2024. (SeongJoon Cho/Bloomberg via Getty Images / Getty Images)
Kelley Blue Book cites Electric Vehicles or EVs “closing the gap” in cost between traditional oil-fueled cars of late, with Tesla leading the market as the most popular brand. In September, Kelley Blue Book reported that EVs on average cost $56,351 vs. gas-powered vehicles at $48,397. However, the popular Tesla Cybertruck model has inflated that number as the average cost is $116,706.
Kia plans to release an EV next year that meets this market demand for more affordable vehicles with its “most affordable EV yet,” according to Electrek. Kia plans to release the EV3 SUV at some time in 2025 and the cost will range anywhere between $30,000-$35,000.
The House of Representatives recently voted to repeal an EPA regulation that would cut down on tailpipe emissions from 2027 through 2032, with 207 Republicans voting on the repeal.
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Kelley Blue Book did not immediately respond to FOX Business’ request for comment.
Based in New York, Stephen Freeman is a Senior Editor at Trending Insurance News. Previously he has worked for Forbes and The Huffington Post. Steven is a graduate of Risk Management at the University of New York.