High Car Prices Push Americans To Keep Their Vehicles Longer

With new and used cars still painfully expensive, Ryan Holdsworth says he plans to keep his 9-year-old Chevy Cruze for at least four more years.

Photo Insert: Blame it mainly on the pandemic, which in 2020 triggered a global shortage of computer chips, the vital component that runs everything from radios to gas pedals to transmissions.

Limiting his car payments and his overall debt is a bigger priority for him than having a new vehicle, Tom Krisher reported for the Associated Press (AP) on May 16, 2023.

A 35-year-old grocery store worker from Grand Rapids, Michigan, Holdsworth would probably be in the market for a vehicle within a few years — if not for the high cost. For now, it’s out of the question.

Holdsworth has plenty of company. Americans are keeping their cars longer than ever.

The average age of a passenger vehicle on the road hit a record 12.5 years this year, according to data gathered by S&P Global Mobility. Sedans like Holdsworth’s are even older, on average — 13.6 years

Blame it mainly on the pandemic, which in 2020 triggered a global shortage of computer chips, the vital component that runs everything from radios to gas pedals to transmissions.

The shortage slowed assembly lines, making new vehicles scarce on dealer lots just when consumers were eager to buy.

Prices reached record highs. And though they’ve eased somewhat, the cost of a vehicle is still expensive to many Americans, especially when coupled with now much-higher loan rates.

Since the pandemic struck three years ago, the average new vehicle has rocketed 24% to nearly $48,000 as of April. Typical loan rates on new-car purchases have ballooned to 7%, a consequence of the Federal Reserve’s aggressive streak of interest rate hikes to fight inflation.

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