If you’re in the market for a new automobile, you may find that your options are somewhat more limited than you may have thought. According to a new study by TrueCar.com, median-income families are finding it harder to fit a new vehicle into their household budgets.
With the average price of a new vehicle at a record-high $30,550, many consumers are having to buy used, or make do with their current autos. Adding to the problem is the fact that many automakers have begun reigning in the incentives that helped them move inventory during the height of the economic downturn.
According to Interest.com’s 2013 Car Affordability Study, which included 25 major U.S. cities, only median-income families in Washington D.C. can comfortably afford the average new vehicle purchase price. The median annual household income in our nation’s capital is $86,680.
Tampa ranked #25 in the study, with a median annual household income of just $43,832.
In calculating the affordability of a new vehicle, the study considered a wide range of typical household expenses, including food, utilities, housing values as well as costs associated with a vehicle purchase like the down payment, taxes, insurance and monthly payments.
Based on these calculations, median-income families in Washington D.C. can afford a sticker price of $31,940. Median-income families in Tampa would be limited to spending just $14,516 – about the cost of a stripped down 2013 Kia Rio.
Interest.com managing editor Mike Sante said, “If you live in New York City or San Francisco, you’re probably going to have to pay a lot for housing, but you don’t have to pay a lot for a car,”
New vehicle affordability has been a concern to automakers as prices have been driven up by manufacturing costs, safety regulations and consumers’ demand for high technology features.
It has only been in the last 20 years or so that power windows and door locks, and even air conditioning were considered luxury options. Today, consumers expect these and other costly features to come standard on even low-end vehicles.
Federal safety and environmental regulations, including fuel-efficiency and emissions standards, have also added thousands of dollars to new vehicle prices.
J.D. Power and Associates director of automotive operations David Sargent says, “The average compact car of today has the features of a midsize model somebody might be trading in – but it may be just as expensive.”