As supply chain bottlenecks finally start to ease, new cars are slowly becoming more widely available. With the Federal Reserve aggressively hiking interest rates to fight inflation, consumers are finding that the cost of financing a new car is suddenly a lot higher than it was even earlier this year.
The Fed has increased interest loan rates to 3% to 3.25%, and the cost of financing is expected to keep climbing. Average purchase prices for new cars rose 6.3% in September to a record of more than $45,000, J.D. Power estimates. Earlier in the year, prices had surged at record levels of 17.5% and 14.5%.
“There’s a lot of pent-up fleet demand because fleets have been starved in favor of consumers,” Kristin Dziczek, automotive policy advisor for the Federal Reserve Bank of Chicago’s Detroit branch said, adding that many government and large commercial fleets are paying sticker price for battery-electric and hybrid vehicles to meet local emissions standards.
