Here’s Why Cars Are More Expensive Than Ever

Carmakers have a strategy in mind.

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Have you gotten sticker shock lately when you’ve looked at the cost of a new car? It’s not your imagination. The average price of a new vehicle is the highest ever for the first quarter, according to CNBC. At $33,319, that’s about $1,000 more than 2018 during the same time frame. Because of that, new car sales are expected to drop by as many as 2.5 million units compared to the same quarter last year.

You’d think the drop might concern carmakers, but as it turns out, the increase reflects a choice. Many automakers are discontinuing less expensive cars in favor of SUVs and pickup trucks, which bring in bigger profits. Find out the best and worst car brands for customer satisfaction.

“Carmakers always say they build what people want,” Wall Street Journal cars reporter Dan Neil told Marketplace. “But they never mention the fact that they spend billions to tell them what they want. It wasn’t just that consumers spontaneously desired a truck that was as big as a house. No, that was a gradual process. And it has been pushed by the automakers primarily because bigger equals more profit.”

In late 2018, Ford announced it was phasing out its Fiesta, Focus, Fusion, Taurus, and C-Max models in the United States while continuing to make the Mustang and Focus Active. Other big automakers did the same, with General Motors ending production of the Chevy Volt, Cruz, Impala, Buick LaCrosse, Cadillac XTS, and Cadillac CT6 in the United States/ And Fiat Chrysler is discontinuing the Dodge Dart and Chrysler 200.

“I can tell you right now that both the Chrysler 200 and the Dodge Dart, as great products as they were, were the least financially rewarding enterprises that we’ve carried out inside FCA in the last eight years,” said Fiat Chrysler CEO Sergio Marchionne said, according to Marketplace. “I don’t know one investment that was as bad as these two were.” Here’s what happens to cars that don’t get sold.

So where does that leave consumers? Well, if you’re in the market for an SUV or top-of-the-line pickup, you can expect better features. Chrysler CEO Mary Barra said the company is investing in “newer architecture” for its trucks and SUVs.

But if you’re looking for a smaller, less expensive car, you might be squeezed out of the market, LMC Automotive President of Global Forecasting Jeff Schuster told CNBC. More and more buyers are likely to look to used cars instead. But before car shopping, make sure you know the secrets car dealers don’t want to tell you.

Jen McCaffery
Jen McCaffery is an associate editor for Reader’s Digest. Her work has appeared in the New York Times, Prevention, Rhode Island Monthly, and other publications and websites. When she’s not writing or editing, she’s growing veggies or trying to figure out the way home from assorted trails.