Car Prices Jump $2,000, As Hagglers Lose Leverage

In March consumers paid roughly 7 percent more for a new car than a year earlier, according to a new report.

In the old days, we could tour a car lot, see the sticker price on a shiny new vehicle and feel confident about negotiating a better deal. But the opportunity to haggle down the price of a new car may be diminishing, according to TrueCar.com, an auto industry research company.

Vehicle transaction prices--defined by Forbes.com as "the actual price a consumer pays for a vehicle, after trade-ins, incentives and any other deals are taken into account"--climbed 6.9 percent in March 2012 from a year earlier. The nearly $2,000 jump brings the national average transaction cost to $30,748, according to TrueCar.com.

"The auto manufacturers have finally found their sweet spot," said Jesse Toprak, TrueCar.com's vice president of industry trends and insight, in a prepared statement.

Car companies are "keeping incentives to a minimum," explained Toprak. As a result, consumers have less wiggle room on the price, resulting in a higher average cost.

Additionally, car companies are producing fewer vehicles, said Toprak. As a result, the manufacturers have less surplus inventory and thus are less inclined to slash prices. The decreased production is due partly to a series of plant closing stemming from the recession and the GM and Chrysler bankruptcies, Forbes.com reports.

The price increase comes at a time when we are already battling mounds of vehicle debt. Americans owe $730 billion in auto loans, second only to the nation's $1 trillion student loan debt and surpassing the nation's $693 billion in credit card debt, according to the Federal Reserve Bank of New York.

While Americans continue to grapple with auto loans, younger generations appear less interested in driving. From 2000 to 2010, the share of 14 to 34-year-olds without a driver’s license increased from 21 percent to 26 percent, according to the Frontier Group.

In a separate study, researchers from the University of Michigan Transportation Research Institute found that while 92 percent of 20 to 24-year-olds had driver’s licenses in 1983, that number dropped to 82 percent by 2008. The researchers found similar, or even more dramatic declines, among other age groups during the same 25-year period, reports Boston.com.

“For generations, the automobile has typified freedom,’’ said Gloria Bergquist, vice president of the Alliance of Automobile Manufacturers, in an interview with Boston.com. “At 16, many people wanted to get their driver’s license because that was the way people connected with their friends.’’ Now, she said, “We’re seeing people connect through their iPhones. That’s their primary motivation -- they want to be in touch with their friends, so they are less focused on buying a vehicle.’’

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Comments

[oldwolf49]

11:46 PM on 04/09/2012

I have found this even with used cars or trucks as I have been looking for one and even the private sellers are looking to make large $$$ on vehicles that are not worth it. '87 F150 4X4 230,000 miles rust and dents for $3000. Just ridiculous.

[Rick Hegdahl]

01:14 PM on 04/07/2012

Buy used cars! Consumer Reports will give you all the info you need to buy the best used cars at the best price. I haven't bought new since the late '80's. I bought a Toyota Corolla and a Ford F-150 used and have never had any major problems. It's all about maintenance and kind treatment.

[Southrnbelle]

12:33 PM on 04/07/2012

14 - 34 year-olds without a license?

Since when can a 14-year-old get a Driver's License in America?

[MichaelAKD]

02:40 PM on 04/09/2012

i did growing up in a rural area, farmers, ranchers kids are allowed to start driving earlier. i got behind the wheel 33 years ago with a permit at age 14 and have not had a single ticket, warning or accident to date. environment matters and anyone who has grown up on a farm or ranch knows full well why we get our permits and licenses before our urban counterparts and it isn't so we can go have fun somewhere, it is all about work and life in the middle of nowhere so to speak.

[JT54]

11:57 AM on 04/07/2012

Now it's time to fix up that old car and keep it for a long time.

[jerryfromcalifornia]

11:16 AM on 04/07/2012

The used car resale market is booming, now IS the time to buy a new car. Just look in the internet for the best price.

[plepgeat]

02:27 AM on 04/07/2012

I think assuming that people without licenses aren't driving is a pretty bad assumption - especially in California, where we have tens of thousands of illegal immigrants who are very interested in driving, but aren't allowed to get licensed.

[mcartri]

01:33 AM on 04/07/2012

Vehicle debt and cradit card debt can be erased/reduced in a bankruptcy, but student loan debt is 99% of the time forever. Even if you die, the government can take your assests, assuming you have any left.

[Kenz300]

08:47 PM on 04/06/2012

I quit buying new cars 30 years ago when I started to feel that the dealers and the sales people were only interested in seeing how much they could get from you. They no longer wanted to build a long term relationship built on fairness and trust.

There is a reason why people feel like they have been taken when they go to a dealer.

THere is also a reason why the Republicans fought so hard to keep auto dealers exempt from the Consumer Protection Act.

I have found that buying a used 30,000 mile or less vehicle from the original owner works best for me. I get a like new car that is 3 years old and pay a lot less.

[nightfly4257]

08:35 PM on 04/06/2012

After all the BS with GM and Chrysler bail out, the automotive industry has not learn there lesson and still sell their vehicles in the same same over price and crooked manners. They are still producing crap and advertising it as a gem. Part of the problem is that the media jumps right back into bed with them because they're big advertisers. It's a vicious cycle but every decade or two, the automotive industry, especially in America, goes in the crisis mode. The grandstand that they will change their ways, get goverment help of some kind, close a division and some dealers, sale goes up for a while, and then they go back to their bad habits of ripping the public off. Nothing ever changes in America, it's only an illusion.

[edejan]

02:58 AM on 04/07/2012

Yup, you hit it on the head! F and F.

[AZdesertdog]

11:19 AM on 04/07/2012

it's quite obvious that you're not only bitter, you're also quite ill-informed.

in case you didn't know, 1978 is quite a long way in the past, and old stories like you're telling are exactly that: old.

let's look at a good example, "the small timer's bible", Consumer Reports. they don't take any advertising, do they?

why do they have more American cars on their "recommended" list than ever before?

your "vicious cycle" comments are also terribly outdated.

if you bothered to even read the article, you'd be well-aware that American manufacturers have indeed changed their ways. they are no longer overproducing vehicles, and dealers can't get enough inventory. that is why incentives are down, and transaction prices are up. American manufacturers are making more money while selling fewer cars.

since scores of factories were closed, the ones now open are working 24/7 to keep up with demand. "days supply" of vehicles on dealer lots have dropped by over 75%.

of course, if you'd like to see drastic drops in sales, just look to your neighborhood Honda dealer. sales are down over 25% from last year, and last year was especially bad because of the tsunami.

[Magoo Spock]

08:28 PM on 04/06/2012

Just think a short while ago we baled out their sorry a.... and this is the THANKS we get....

[AZdesertdog]

11:24 AM on 04/07/2012

now let me get this straight.

the government gave GM and Chrysler loans, with the stipulation that they change their way of doing business.

they did, and are leaner than every before.

both paid back every penny asked of them, with interest.

now, American manufacturers are posting double digit gains every month; they are indeed leaner and very profitable.

...and you're complaining.

what "thanks" did you want; those huge incentives that got everyone into trouble in the first place?

sheesh.

[JT54]

12:12 PM on 04/07/2012

Well said. GOPers' problem is that the president made the right decision while their side wanted to bankrupt GM and Chrysler and sell it off in pieces to foreigners.

[jamesnic]

09:10 PM on 04/07/2012

It is a bit humorous when you hear folks complain about the car companies and banks doing well and making money after we bailed them out. To help them survive was the purpose, wasn't it? Would they be happier if the companies went under and never paid any of the money back?

[pcs5141]

08:20 PM on 04/06/2012

Unless I win the lottery I will NEVER buy another new car.

[chaya]

06:37 PM on 04/06/2012

My partner and I haven't bought a car from a dealer since the early 80's.

We've had no complaints.

[Jane Porto]

04:51 PM on 04/06/2012

Buy a car become a debt slave.

[Kevin Pelissier]

03:03 PM on 04/06/2012

“We’re seeing people connect through their iPhones. That’s their primary motivation -- they want to be in touch with their friends, so they are less focused on buying a vehicle.’’

Or maybe that 1 trillion in student loan debt makes it hard for 20-24 year olds to afford a car payment

[Clarabell]

02:37 PM on 04/06/2012

I will be happy to have the haggling over with. Buying cars in this country has always been a nightmare. I like to go some place, look at the product and then the price and either buy it or leave.

That 3 hour -- "wait I have to talk to the Manager" (again) is a waste of everyone's time and emotions. Put your best price on it and then just sit and wait on the customers who want to buy -- see how simple it should be ???

[AZdesertdog]

11:35 AM on 04/07/2012

here's a little history lesson for you. the MSRP you see on any new car sold in the United States is called a Monroney sticker.

it was named after former Oklahoma Senator Mike Monroney, who was the author of the Automobile Information Disclosure Act of 1958. 1958 was the first year new automobiles were required to have a manufacturer's suggested retail price sticker affixed to every car sold in the United States.

perhaps you'd prefer the method they have in other countries.

there is no "window sticker"; nothing to work from, and no negotiating.

they tell you how much the car is.

you pay the price.

here's a little secret for you: head to the fleet department. every dealership has one.

they are paid on volume, not profit. they will pull out the invoice, and show it to you. usually the price will be invoice, or a few hundred dollars over that. you keep all of the incentives. you'll be done in less than five minutes.

unless you like complaining.