Used Car Prices Jumped A Whopping 52%, New Cars By 29% While Your Income Went Up Only 13% During The Past 3 Years (2024)

Both new and used car prices increased by much more than the median household income

by Thanos Pappas

October 29, 2022 at 17:55

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The market is not as kind to car buyers as it used to be, with inflation, supply chain issues, and rising prices making cars less affordable. A new study by iSeeCars proves what we have already felt when going through car ads, showing the true extent of the problem.

According to the study, used car prices increased by an impressive 52 percent between August 2019 and August 2022, while new car prices rose by almost 29 percent. During the same period, the median household income in the US saw a 13 percent increase. This means that in three years’ time, used car affordability dropped by 26.7 percent, and new cars became 13.3 percent less affordable.

Read: Soaring Prices And Interest Rates Send Many Monthly Car Payments To Over $1,000

Taking an example from the charts listed on iSeeCars’ website, in 2019 a new Nissan Frontier was priced at $27,146, while in 2022 it costs $39,833. Things are even worse in the used car market where the price for a three-year-old Toyota Camry rose from $16,548 in 2019 to $27,404 in 2022. A similar increase applies to popular used SUVs including the Jeep Compass (from $15,706 to $25,605), the Honda CR-V (from $19,599 to $30,193) and the Toyota RAV4 (from $20,534 to $32,056).

Karl Brauer, iSeeCars Executive Analyst, said that the rising prices of new and used vehicles outpaced income growth “due to supply chain shortages and increased demand”. “People still need to replace their vehicles so the resulting drop in affordability means shoppers are either taking longer loan terms and paying higher interest rates, putting down less money for a down payment, or even forgoing the kind of car they originally wanted for a lower cost model in order to make ends meet,” he added.

The Car Affordability Index is calculated by comparing median household income to an idealized income for financing a car through typical car loan rates and terms (a 60-month loan for new cars and a 36-month loan for used cars). The company makes an assumption that car payments should be no more than 10 percent of the household’s annual income.