New Car Prices Are Quickly Getting Out Of Control

Mar. 06, 2022 3:37 PM ET by Jay Traugott Industry News / 16 Comments

Stellantis CEO Carlos Tavares is sounding the alarm.

The average new, non-luxury car price last year came to just over $43,000. They're already hitting just over $45k so far this year. This is expected to keep climbing due to rising inflation and other pandemic-related supply chain issues. Quite obviously, new car buyers are going to feel the pinch like never before and this is a cause for concern, according to Stellantis CEO Carlos Tavares.

Per The Detroit Bureau, Tavares made it clear this is a problem and automakers need to be paying close attention. "I am very concerned about the effect of affordability," he said. He pointed out other specific factors, including the semiconductor chip shortage, which have led to what was a buyers' market to a sellers' market.

And now there's the war in Ukraine that's already disrupting supply chain issues to major European-based automakers, including Volkswagen and BMW. Prices of raw materials, such as aluminum and nickel, have also gone up in recent weeks. Taveres' bottom line is this: automakers must find ways to cut costs so that buyers aren't suffocated. If that were to happen, "the middle classes would not be able to buy new cars."

Anyone shopping for a new vehicle right now, whether it's an entry-level Jeep Renegade or something more premium like a Jeep Grand Wagoneer, will discover they'll be paying MSRP, at the very least. The CEOs of Ford and Subaru, for example, have publicly gone on record to warn dealerships, which are privately owned, not to engage in excessive price gauging.

2019-2022 Jeep Renegade Front Angle View

2019-2022 Jeep Renegade Side View Driving

Consumers shouldn't expect incentives these days, but paying thousands above MSRP is clearly unacceptable. What can be done about this? For starters, automakers can work to find ways to reduce new vehicles prices by eliminating normally some standard features, such as larger touchscreens and various subscription services. Best example: the new Ford Maverick. It begins at just under $20,000 thanks to keeping things simple, like crank windows and an overall back-to-basics approach to features.

The fact that it's sold out for the rest of the 2022 model year is a clear-cut sign many consumers have responded positively to Ford's strategy.