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.’’