The cost of purchasing a car has skyrocketed in recent times, making it increasingly expensive for consumers. Not only have new car prices reached nearly their highest levels ever, but the interest rates for financing a purchase have also surged significantly. Recent reports indicate that fewer affordable new cars are entering the market.

According to car shopping app CoPilot, the supply of new cars priced under $30,000 now only accounts for 8% of the market, compared to 38% before the pandemic. CoPilot's CEO, Pat Ryan, describes this as the least affordable car market in modern history.

Prior to the Covid-19 pandemic, consumer preferences were already shifting away from sedans and toward more expensive SUVs and trucks. Car buyers began favoring additional features such as advanced touch screens, ambient lighting, 360-degree cameras, and heated/cooled seats. Ivan Drury, Edmunds' director of insights, refers to this trend as a "war of features." In response to increased demand, dealers started stocking more fully equipped cars, and automakers focused on higher-end packages and trim levels while reducing their offerings of lower-priced vehicles.

This shift has resulted in record-high car prices. According to Edmunds, the average transaction price for new cars in May was $47,892, approaching an all-time high. The percentage of vehicles sold above $70,000 has risen from 3% to 10% over the past five years.

Conversely, there are now fewer options available at lower price points. Edmunds found that only 0.3% of new vehicles sold cost less than $20,000, compared to 8% five years ago. As a result, an increasing number of potential car buyers find themselves priced out of the new car market.