Ford is an automaker that has transitioned from smaller, more affordable sedans to trucks and SUVs.
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The car market has calmed down quite a bit since the start of the pandemic, when chip shortages limited inventory. But the price of new cars is still quite high.
A new report from auto research site Edmunds says the entry price for a new vehicle (once $20,000) is now $25,000. And the average shopper spends much more.
During the car shortage of the past two years, automakers used their very limited supply of semiconductor chips for their newest, brightest, and fanciest cars.
“Because if they can’t sell that many, they want to sell the more expensive versions,” said Mike Ramsey, an automotive analyst at Gartner.
Somewhere along the way, he said, companies stopped focusing on more affordable sedans: “The Ford Fiesta, the Ford Focus, the Ford Fusion.”
The Mustang is the only car that Ford has not stopped making. Most automakers are focusing on trucks and SUVs, and it feels like the chicken and the egg. Do people buy bigger vehicles because that’s what’s available? Or do companies make them because that’s what people want?
“All of the above,” said Cars.com editor Jane Ulitskaya. “I think the automakers are definitely going back to the more popular models.”
Trucks and SUVs accounted for nearly 80 percent of new car sales in March, he said. And auto research site Edmunds says that of those large SUVs, more than 90 percent cost more than $60,000.
“The new car buyer is a pretty affluent buyer,” said Michelle Krebs, an analyst at Cox Automotive. “And those buyers tend to want big SUVs with the fancy features, and the luxury part of the market has really grown.”
Krebs expects the trend to continue, meaning average vehicle sales prices are unlikely to return to pre-pandemic levels.
“It’s like gas prices,” he said. “Prices go up a lot, but they are no longer where they were before. And we’re just getting used to it.”
A little relief: The sticker price isn’t always what you pay for. As interest rates rise, incentives such as rebates and lease offers return.
