Great American Car Rip Off
Consumers currently in need of a new car are facing what can be called the “Great American Car Rip Off”. Because of Covid and the lockdowns it brought, the entire American auto manufacturing industry was turned on its head. Covid lockdowns kept consumer’s from shopping for new cars. Auto plants were locked down in the name of safety. Supply chains came to a halt. But once life in American began to return to some semblance of normalcy, consumers quickly bought what inventory was on dealer’s lots and a shortage was born.
This shortage is to some extent still in existence. This has caused a total upheaval of car market. The early shortage of car and trucks allowed the manufacturers to raise prices. And because production did not ramp up to past levels quickly due to supply chain issues, auto dealerships felt they needed to increase their margins and raised the prices of the cars and trucks they received from the manufacturers even higher. This leads the auto manufacturers and dealerships to reap huge profits from the very low number of vehicles being sold. This spawned corporate greed. Manufacturers raised sticker prices on the car and trucks they built. From 2019 to 2023, the sticker prices of those cars and trucks rose an average of 30%. That meant that a pickup truck that sold for $45,000 in 2019, sold for $58,500 in 2023. And to add insult to injury, the manufacturers decided to build a disproportionate amount of their pickup with highest of trim levels. This brought the average pickup truck price to rise to around $75,000. This by itself might be bad for the consumer, but then dealerships decided to add what they called a “market adjustment fee” to the price of the trucks. These market adjustment fees went from around $10,000 on the lower level trim packages to around $20,000 on the higher and most sought after trim levels. So now, what once was a $45,000 pickup is now selling for $68,500 and the highest trim levels anywhere from $85,000 to sometimes over $100,000!
This brings us to today. The price of car and trucks are so high, much of the American consumers can no longer afford to buy them. It’s not just the prices, but interest rates have shot up to making payment even more unaffordable. Currently, over 60% of pickup trucks sold have monthly payments above a $1,000. With payments like this many consumers are priced out of the market due to them not being able to be approved for loans. And those that do qualify for these high payment amounts find themselves quickly struggling because of it. The number of people who are defaulting on their loans has doubled and the number of vehicles that banks want to repo has skyrocketed to the point that there is a shortage of repo truck drivers. Couple this with the fact that used cars prices at auctions are falling and you can understand why many banks are paying repo companies bonuses in order to get their repo’s made as quickly as possible.
But the lure of high profits, have made manufacturers go so far as to limit production so that they can continue to get these high prices and keep their fat profits. Some car experts have even made the claim that the manufactures have actually welcomed the current UAW strike as a way to keep production low, prices high and blame on the union instead of the car makers. The only place all this can go is to create a financial disaster. But, in defense of the manufacturers, they have been using a great portion of their fat profits to step up production of EV’s that the federal government is mandating. The only issue with this, is that it seems EV’s are turning out not to be quite as popular as the federal government has been promoting. If the US car market collapses, it could be the spark that starts a deep recession.
So it would seem that our current “Great American Car Rip Off” is capable of bringing down our entire economy. The financial pain that might happen due to this Car Rip Off is something that everyone should take very seriously and stop and think twice about before making expensive purchases, like new cars and trucks.