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Why Are Cars So Expensive Lately?

Car Prices and Costs are Rising

It’s true, car prices are increasing at an alarming rate, often putting brand new vehicles and even relatively new used vehicles out of budget range for many automotive consumers.

When new car prices increase, so do used car prices.

So why are car prices and costs so high now?

New cars, like most other goods, are more expensive to build now than ever before. Materials, labor, distribution, marketing, and sales costs increase every year.

Contrary to popular belief, car dealers actually don’t have much built-in profit margin between invoice price and MSRP sticker price. As a result, dealers are forced to try to find other ways to make a profit to stay in business.

How dealers generate profit

One of the ways dealers generate additional profit is through what is called a “doc” fee, which is added to the cost of a car. It is made to sound like an official fee but is not. It’s typically in the range of $499-$699 for an average vehicle. It can sometimes be negotiated lower, or even out of a deal completely.

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