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Miami Herald
19 hours ago
- Automotive
- Miami Herald
New car buyers are finally starting to feel the pain from tariffs
Car buyers have been spoiled by the current buyer's market. Car dealers have relied on incentives to combat the expected loss in demand from the 25% auto tariffs President Donald Trump announced in April. "People are buying cars because they think tariffs are coming," one Mazda dealer said. Related: Ford debuts plan to increase sales that car buyers will love Auto sales climbed sharply through the first half of the year as consumers were motivated by the incentives and the need to buy vehicles before any tariff-related price increases. A recent Bank of America note, however, suggests that the good times are slowing as consumer vehicle loan applications declined from their peak in April, "suggesting that 'buying ahead' has largely run its course." Bank of America expects lower-income and younger buyers to feel the most pain, as its data shows that median car payments have grown faster than new and used car prices since 2019. Shockingly, of those households with a monthly car payment, 20% have a payment over $1,000. Image source:Make no mistake: The auto tariffs are extremely expensive. But automakers, at the White House's behest, have chosen to swallow much of the pain for now. "Tariffs remain a major headwind for vehicle affordability," said Cox Automotive Chief Economist Jonathan Smoke. "Even with some trade relief, the added cost – up to $5,700 per imported vehicle – hits the most affordable models hardest, limiting options for price-sensitive buyers." "We are in the early stages of seeing how manufacturers deal with these added costs, but we do not believe that the American consumer can absorb it all." Related: Car buyers have a lot riding on the 'Big, Beautiful Bill' The estimated average auto loan rate rose by 5 basis points in June to 9.94%, according to Cox Automotive. The current level is still lower by 75 bps year over year, but auto loan rates are the highest they've been since December. The average new-vehicle price rose 0.2%, according to Kelley Blue Book, and the typical payment increased by 0.1% to $757, also the highest it's been since December. The average monthly payment peaked in December 2022 at $795 per month. Nearly half of American drivers cite car expenses as the reason they can't save any money, and the average American spends about 20% of their monthly income on auto loans, fuel, insurance, and maintenance. Most financial experts cap the monthly income you should spend on a vehicle at 15%. According to a MarketWatch Guides survey, about 10% of drivers say they spend 30% of their monthly income on driving, while another 12% said they "found themselves living paycheck to paycheck due to the financial strain of their cars." In addition to capping your car payments at about 15% of your monthly take-home, financial experts also recommend shoppers aim for a 20% down payment, a 36- to 48-month loan term, and expenses (including insurance) at between 8% and 10% of your gross monthly income. Experts also recommend that you know your credit score and loan approval amount in advance and that you shop around with different lenders for the best rate. Related: Another luxury car maker is taken down by US tariffs The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
Forbes
a day ago
- Automotive
- Forbes
Sub-$20K Used Cars Are Becoming A Vanishing Breed, Study Shows
Pre-owned rides at affordable prices are becoming difficult to find, leaving cash-strapped buyers in ... More a bind. It's a familiar rite of passage for a freshly-licensed teen to buy (or be given) an inexpensive used model as his or her first car. Unfortunately for those coming of age these days, good-quality used cars priced at under $20,000 are becoming increasingly rare commodities. Affordability issues in the auto business can be traced to the pandemic era, when factory shutdowns and supply chain shortages caused a shortage of new vehicles on dealers' lots which, in turn, sent shoppers to the pre-owned end of the lot. The added demand combined with limited supplies because of fewer trade-ins caused the prices of used cars to skyrocket. Prices have somewhat stabilized of late, but with new-vehicle transaction prices now averaging $48,907 (according to Kelley Blue Book), a significant number of shoppers are still turning to older cars out of financial necessity, but are finding few bargains. In fact, a recent study of over 2.6 million 3-year-old used cars conducted by the online vehicle marketplace shows that while sub-$20,000 models made up more than half of the market in 2019, in 2025 they account for just 11.5%. Prices have trended upward to the extent that the $20,000 to $30,000 segment now accounts for 43% of the late-model market. The average three-year-old used car now goes for a whopping $32,645, according to the website, which represents a $9,476 increase since COVID-19 first struck. While in 2019 42% of used Honda CR-V and Toyota RAV4 compact SUVs on the market cost less than $20,000, the website's statisticians say that number today is practically zero. It's the same story with pre-owned versions of popular models that include the Chevrolet Equinox, Honda Civic, Kia Sportage, Nissan Rogue, Toyota Camry, and Toyota Corolla. And with the average vehicle ownership period reportedly reaching eight years, according to the insurance site there's a dearth of older 'beater' cars on the market to accommodate cash-strapped shoppers. 'The pandemic may be a fading memory, but the lack of new car production five years ago has created a 'pandemic hangover' effect for today's used car market,' says iSeeCars Executive Analyst Karl Brauer. 'Many car buyers are now priced out of late-model used cars, forcing them to consider older models with more miles to fit within their budget.' Just as the numbers of new sedans in dealers' showrooms have dwindled in recent years, prices of pre-owned passenger-cars have been skyrocketing. In 2019 models like the Honda Civic and Accord and the Toyota Camry and Corolla – all of which remain in production – accounted for 70% of three-year old used-vehicle market, but data shows it's dropped to 28.1%. That's a 60.2% dip. Average prices in this segment have jumped from $19,734 in 2019 to $29,343 in 2025, which can at least in part be attributed to fewer new cars on the market in recent years With regard to other model segments, the number of three-year-old SUVs going for under $20,000 dropped from 39.2% to a mere 8.1% since 2019, iSeeCars says, and the average transaction price has gone from $31,649 to $36,509. Added new-SUV sales and a greater number of subsequent trade-ins could be one reason the price jump is tempered somewhat. Used late-model truck prices split the difference with a 28.8% boost since 2019, going from an average $21,627 to $40,731. According to iSeeCars the U.S. cities in which the lowest percentage of three-year-old used vehicles still sell for under-$20,000 are Boston, MA (6.5%), Minneapolis-St. Paul, MN (6.7%), Hartford, CT (8.9%), Austin, TX (8.5%) and Philadelphia, PA (9.0%). Used Cars, Trucks and SUVs With The Steepest Price Increases These are the 15 most-popular three-year-old pre-owned vehicles iSeeCars' study determined have experienced the heftiest average price boosts since 2019: Source: you can read the full report here.
CNET
2 days ago
- Automotive
- CNET
Last Call for the $7,500 EV Tax Credit: It Expires in September
Car dealers are always advertising that now is the best time to buy, but if you're in the market for an electric vehicle, now might actually be the best time to buy. The reason: Congress voted to pull the plug early on a massive tax incentive that could save buyers up to $7,500 on new EVs. Instead of expiring in 2032, the tax break now ends Sept. 30 of this year. An EV you buy in October or later won't qualify. The move by congressional Republicans and signed by President Donald Trump was designed to help pay for the continuation of tax cuts from Trump's first term, which some say are most helpful for the wealthiest taxpayers. Congress gutted a host of clean-energy tax breaks in the bill Trump signed on July 4, essentially repealing much of the Inflation Reduction Act passed under President Joe Biden. With the EV credit expiring mid-year, it sets up a weird 2025 for an auto industry that also faces potential challenges from Trump's tariff policy. Thanks to international supply chains for parts and materials, this is likely to increase the cost of cars and trucks even if they're assembled in the US. If you're in the market for an EV, that means you might want to think a little more closely about your buying schedule. "My ordinary advice for everyone all the time is don't be in a big hurry, take your time and make a careful decision," Sean Tucker, lead editor at Kelley Blue Book, told me. "This is the one circumstance where you might want to be in a big hurry." It makes sense that EV sales are at a record pace through the first six months of the year, according to KBB data, and the end of the tax credit could lead to a third-quarter boom, with the bottom falling out in the fourth quarter. Watch this: Optimizing Your EV's Efficiency Is Easier Than You Think 07:14 What is the EV tax credit? Right now, the federal government provides a credit of up to $7,500 for a new electric vehicle, plug-in hybrid or fuel cell electric vehicle. The credit is split into two equal parts, with a $3,750 credit each if the vehicle meets requirements for the sourcing of materials for the battery components and critical materials. Because of those requirements, only a handful of vehicles qualify. You do need to meet some income limits -- you can't have taxable income above $150,000 if you file individually, $300,000 if you're married filing jointly or $225,000 if you file as head of household. There's also a credit for used EVs equivalent to 30% of the sales price up to $4,000. The list of qualifying vehicles here is more extensive, but the used EV market is also a lot smaller than the new EV market. Although that has been changing -- more than 100,000 used EVs were sold in the US in the second quarter of the year, compared with more than 300,000 new EVs, according to KBB data. To get the credit, you can either claim it on your tax return the following year or you can transfer the credit to the dealer so they can apply it to your purchase cost. That second option has become more popular since it's easier and reduces your up-front cost. You can also get the credit on leased vehicles. Dealerships are very familiar with applying credits toward leased EVs, Tucker said. Should I buy an EV now before the credit ends? The most important part of deciding whether to buy a car is to buy one when you're ready to. Don't rush into a big purchase just because a tax credit is ending. The fact is that EVs are coming down in price and are often similar, when you consider the total cost of ownership, to the price of a gasoline-powered car. You should also consider that not every EV qualifies for this credit anyway -- the one you're eyeing might not see any change in pricing, at least not due to the credit expiring. (Tariffs are another issue.) But the end of the credit does mean dealers will likely be looking to reduce their stock of electric cars by the end of September. That means if you're in the market and you're eyeing one of the qualifying vehicles, you may want to move to make a purchase before October, Tucker said. There could be more strategy at play. Tucker suggested looking at dealers that have significant stocks of EVs, which may offer steeper discounts to get them off the lots before the prices go up. The best time to buy might be mid- or late September, right before the credit ends, to get the best deal possible. "If I tell you it's your last chance to save $7,500 on something, that's a sentence you don't hear very often," Tucker said. Don't let this moment overwhelm other good car-buying advice, though. Tucker advises that one of the best ways to get a good deal is to buy a vehicle that's right for you most of the time, even if it doesn't necessarily meet every possible scenario you can think of. Do you really need a third row of seating if you'll only use it when company is in town? Do you need a big pickup truck if you're mostly just hauling yourself to the office? CNET's auto expert, Antuan Goodwin, suggests reevaluating your car-buying goals to save money. For example, Goodwin says, instead of a top-tier model, consider a mid-trim level with only the features you truly need. You can also consider low-mileage, pre-owned cars or leasing as alternatives to buying new. "If going electric would stretch your budget, exploring combustion alternatives like plug-in or traditional hybrids are good compromises," Goodwin said. "That's mostly because I don't want to dissuade anyone who's 'set on going electric' from doing so, but for someone on the fence, alternatives exist."
The Independent
2 days ago
- Automotive
- The Independent
Last remaining new car below $20,000 in U.S. to disappear by end of summer
The last remaining car selling for less than $20,000 in the U.S. is expected to disappear from dealers' lots in the coming months. The Mitsubishi Mirage — a five-seat hatchback sedan — sells for an average of $18,484. The model was discontinued in June, and inventory is rapidly dwindling, with less than 1,700 vehicles available across the U.S., according to Kelley Blue Book, a vehicle valuation and research company. Now, the country's last sub-$20,000 vehicle will likely be gone by the end of the summer. As of April, the average new car sold in the U.S. for $48,422, while the average used car sold for $25,373, according to vehicle research site Edmunds. While car prices are negotiated between dealers and sellers, manufacturers give recommended prices, known as the 'manufacturers' suggested retail price,' or MSRP. The average MSRP in April was $50,408 for a new car, Edmunds reports. The average new car owner pays $742 monthly at an interest rate of 6.35 percent, with a loan term of five-and-a-half years, consumer credit company Experian reports. Car prices are expected to rise due to President Donald Trump 's tariffs, which tax imported cars and auto parts at 25 percent. While prices have remained in check since Trump issued his wide-reaching tariffs in April, experts say prices are expected to spike in the coming months, CNN reports. 'I still think we're still going to prices start to take off in two to three months,' Ivan Drury, director of insights at Edmunds, told CNN. Prices have largely stayed the same because car dealerships are still working through their pre-tariff inventory. Consumers have also stayed away from big purchases over tariff fears, and the demand for cars has fallen. Drury also told CNN that current steady car prices could encourage consumers to buy more cars soon, which would in turn drive prices up later this year. Adam Jonas, auto analyst at Bank of America, told CNN the biggest price hike will come as dealers start to announce their 2026 models. 'I think with the changeover to 2026 models, [that] will be the opportunity for companies to raise prices on new vehicles so they don't enrage certain folks that might come down on them for raising prices,' Jonas said.
Gizmodo
2 days ago
- Automotive
- Gizmodo
America's EV Slowdown Is Here
The era of seemingly unstoppable growth for electric vehicles in the United States has come to a screeching halt. New sales figures for the second quarter of 2025 reveal a market in reverse, with momentum waning as the industry confronts significant headwinds from high prices and persistent consumer anxiety. According to a new report from Kelley Blue Book, the U.S. electric vehicle market, long seen as a bastion of growth, hit a significant speed bump, with sales dropping by more than 6% in a stark reversal of recent trends. This slowdown suggests the industry is facing mounting pressure from consumer concerns over affordability and charging infrastructure. Total EV sales in the second quarter fell to 310,839 vehicles, a 6.3% decline from the 331,853 sold during the same period in 2024. The downturn marks a recent development, as year-to-date sales figures remain slightly positive. From the start of 2025 through the end of June, 607,082 EVs were sold, a modest 1.5% increase over the 597,834 sold by this time last year. This contrast indicates that while the year started on solid ground, the spring quarter saw a significant cooling of buyer enthusiasm. This contraction challenges the long-held narrative of exponential growth and forces the auto industry to confront pressing questions. Are high sticker prices finally creating a ceiling for buyer demand? Has the slow buildout of reliable public charging networks begun to deter mainstream consumers? Or, after an initial wave of early adopters, is the market simply becoming saturated with high-end models while a true, affordable EV for the masses remains elusive? The hurdles for the EV transition are significant and multifaceted. A primary barrier remains the price. As of early 2025, the average transaction price of a new electric vehicle was approximately $55,614, considerably higher than the $48,641 average for a new gas-powered car, according to Chase. Even with government incentives, this price gap keeps EVs out of reach for many middle-class Americans. Public charging infrastructure also continues to lag behind what is needed for mass adoption. While a road trip in a Tesla may be straightforward thanks to its proprietary Supercharger network, drivers of other brands often find long-distance electric travel remains a logistical puzzle. The Biden administration had invested heavily in building out a national charger network, but the rollout has been slow and fragmented. This stands in contrast to policy proposals from the new Trump administration that sought to reduce government aid encouraging consumers to switch to electric vehicles. Until charging becomes as ubiquitous and reliable as stopping for gas, many consumers may continue to favor gas-powered cars or plug-in hybrids. Digging into the report reveals a market in flux. While Tesla's sales declined 12.6%, the company remains the undisputed market leader. Tesla's market share grew to 46.2% in the second quarter, up from 44.7% in the same period last year. Two General Motors brands, Chevrolet and Cadillac, stand out. Propelled by new models, Chevrolet is now the second largest seller of electric vehicles in the United States, capturing 9.2% of the market. On the other hand, Ford saw its market share decrease to 5.3%. The young disruptor Rivian also saw its share of the market increase to 3.4%. Tesla's Model Y SUV remains the best-selling electric vehicle in the country, but its sales fell 15% to 86,120 units over the past three months. The Model 3, Tesla's entry-level sedan, bucked the trend and ranked second with 48,803 vehicles sold, an increase of 14.3%. In a sign of shifting consumer preference toward affordability, the Chevy Equinox secured the third-place spot with 17,420 units sold. Overall, the U.S. EV market is maturing, and that means growing pains. These pains are likely to be severely exacerbated by a looming policy change: the scheduled end of the $7,500 federal tax credit for new EV purchases and the $4,000 credit for used EVs on September 30. For an industry already showing signs of a slowdown, the removal of its most significant purchase incentive represents a critical test of its resilience.
