Understanding The Impact Of Inflation & Car Prices
Inflation, or the rate at which prices rise over time, has significantly impacted the American people and many other parts of the world. Increasing costs have drastically changed how the average car buyer spends their money, affecting other nationwide industries, such as the car market. However, the good news is that it’s beginning to change! Moon Township Ford acknowledges your concerns about inflation and car prices and how that may change your budgetary constraints. On that note, we’re excited to share that, though the inflation rate remains high, car prices are beginning to decline. Dealerships are once again receiving an influx of vehicles on their lots, and car buyers now have more options than they have in years. Our Ford dealership in Pittsburgh, PA, is here to walk you through car inflation rates as we discuss how inflation has affected the car market and your purchasing power, and how to combat high interest rates for new and used cars. Follow along to discover more about the impact of inflation and what it looks like to buy a car in the current market at Moon Township Ford.
Inflation: Past, Present, and Future
Inflation has always played a role in the economy and the rate of increase or decrease of prices. In 2020, the onset of the pandemic disrupted the automotive industry’s ability to make, complete, and ship cars due to factory closures and semiconductor chip shortages. This led to a crisis for the automotive industry and car buyers alike. Car prices began to rise, and automotive manufacturers produced fewer cars. Amid these challenges, the cost of materials rose, making it more expensive to secure essential vehicle-building components, such as steel and rubber. Today, inflation rates remain high, resulting from higher production costs and the increased higher costs of living, specifically in the housing market. The current inflation rate is 3.5%, an increase from the recent 3.2%. However, the value of cars has remained the same. In the last year, the average price of a new car has gone up a total of 4.2%, fueling the demand for used cars, for which the prices are currently tracking up to 30% of pre-pandemic price levels. Furthermore, loan rates remain high for new and used vehicles. Though we are starting to see a small decline in car prices, the average loan for a new car stands at 7.18%, while a loan for a used car is currently at 11.93%.
These statistics are prime examples of the staggering effects of inflation and car prices as high interest rates are making it less affordable to purchase a vehicle in the current market, despite the slight decline in car prices. While inflation rates fluctuate given supply and demand and other factors like car insurance and gas prices, inflation and car prices are expected to drop up to an estimated 10% for used cars and 2.5% to 5% for new vehicles in the near future. But what does this mean for car buyers searching for the perfect Ford right now?
The Effects of Inflation on Dealerships and Car Prices
Like automakers and potential customers, dealerships have suffered due to inflation and rising car prices. During the pandemic, it became tough to obtain vehicles due to low vehicle production and the shortage of semiconductor chips. Many dealerships would receive new vehicles on their lots without the semiconductor chip to boost inventory and offer shoppers a more comprehensive shopping selection. However, without the semiconductor chip, cars were un-driveable and stayed at the dealership until the arrival of the semiconductor chip, which was often weeks or even months.
To combat vehicle shortages, automotive manufacturers began offering shoppers the opportunity to custom order their vehicles straight from the dealership. By completing a custom order, car buyers could select their vehicle model, trim level, exterior color, and exterior and interior specifications right from the comfort of their homes. This allowed dealerships to continue to make sales despite low or no inventory levels, and car buyers created their new cars to their exact specifications. Once the vehicle arrived at the dealership, the buyer could come pick it up or schedule a time for home delivery, based on their location from the dealership.
Despite rising inflation and lower car prices, custom orders are still a very popular option for car buyers. Create your dream Ford today by contacting one of our sales representatives.
Tips for Buying a Car Amid Inflation and Decreased Purchasing Power
When you need a new car, waiting for vehicle prices to drop is sometimes impossible. That’s why we’ve put together our top tips for buying a car despite rising inflation and car prices and what you can do to ensure you get the best deal possible. High interest rates have dramatically shifted purchasing power, making it crucial to understand how to navigate auto financing in this economic climate.
Take advantage of affordable auto financing in Pennsylvania when you apply for financing with us online. The Federal Reserve’s measures to control inflation and interest rates significantly impact the rates for vehicle financing, affecting both new and used car purchases.
Set Your Budget
Before you buy a new car, understand what you can afford and what your ideal monthly payment looks like. Setting a budget will help you determine which Ford is right for your lifestyle and plan ahead to avoid purchasing a car over your price limit. Use our payment calculator to estimate your monthly payment online today.
Have Options
Once you’ve determined a suitable budget for your new Ford, check out our inventory to select a few options to test-drive at our dealership.
Shop Sales
We often offer specials and sales events to help our valued customers navigate rising inflation and car prices. Consider shopping around when dealerships have large sales, like Memorial Day, Labor Day, or Black Friday. Also, take a moment to check out our New Vehicle Specials to see what deals we have available!
Apply for Financing Considering Interest Rates
Take advantage of affordable auto financing in Pennsylvania when you apply for financing with us online. Many dealers are offering 0% APR financing for select new models. We’re here to help you get the best deal possible!
Consider Leasing
If purchasing a car is outside your budget, leasing is a great way to enjoy a new vehicle without the burden of high car payments.
We’re Here for You
Purchasing a new Ford amidst rising inflation and car prices can be intimidating. Discover the best fit for your budget when you trust Moon Township Ford in Pittsburgh, PA. Come see us today!
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