- Car-buyers are looking for the best way to get the best deal these days.
- Certain brands have had larger increases in monthly payments since the pandemic started.
- Experts say to look out for those brands and what those prices could mean in a recession.
Consumers in the car-buying market are in luck… with the prices of certain vehicle brands this year.
There’s no question that car-buying has proven difficult over the past few years, driven by the pandemic and chip shortage that left new and used vehicle inventory low and the prices of these cars high. Those dynamics meant car-buyers weren’t likely to find what they were looking for on dealership lots and might have had to overpay for a vehicle that didn’t have the features they wanted.
But one of the most key factors to consider, especially as the challenging economic environment persists, might be vehicle brand, Cox Automotive senior economist Charlie Chesbrough said at a recent Federal Reserve Bank of Chicago annual auto insights symposium in Detroit.
Between March 2020 and December 2022, average monthly loan payments jumped about 29%, according to Dealertrack data Chesbrough shared. The average was $785 for a loan in December.
“It’s not the same for all the different manufacturers,” Chesbrough said. “Not everybody has risen their monthly payments in quite the amount.”
Certain brands raised loan prices more than others
Homegrown automakers like Ford and GM accounted for eight of the top 10 brands with the largest increases in those payments during that period.
That means that, of the vehicle brands that got more expensive since the pandemic began, Detroit-based brands are the top culprits, including Dodge, with an average 44.5% increase, GMC at 44%, Jeep at 42%, Cadillac at 39%, and Ford at 36%.
“Their customers are going to be in for a big surprise when they come in to buy their next product from them,” Chesbrough said.
Alfa Romeo, Mini, Subaru, Jaguar, Audi, Kia, Mercedes-Benz, Infiniti, Toyota, and Genesis, made up the 10 brands with the lowest increases in their average monthly loan payments over the same period. Alfa only saw a 9% increase, and Genesis’ was 21%.
Toyota was one of the 10 brands with the lowest increase in their average monthly loan payments since the pandemic began.
Yichuan Cao/NurPhoto via Getty Images
What buyers should look out for
The brands that saw only mild inflation may be less vulnerable to worsening economic conditions, according to Chesbrough.
“One would think that if we do fall into a recession, some of these brands may be a little bit more insulated from a downturn than others,” he said.
That doesn’t necessarily mean consumers shouldn’t buy from certain automakers. The domestic brands, despite those increases, might actually have more inventory now than others, which could benefit car-buyers. It depends on if a buyer is seeking out the right price, or the right vehicle.
“We think that there’s really not going to be enough demand there at these high prices,” Chesbrough said. “The manufacturers are going to have to start discounting, but it’s going to be a game of chicken and as to who is willing to hold price and not discount and maybe lose some market share, and who’s going to aggressively go at that.”