The Washington Post published a report in its Sunday issue detailing the increased price of automobiles Americans are experiencing. A new vehicle purchase now averages $48,000 . . . a gobsmacking figure.
From greedy profit-motivated manufacturers to the Fed’s anti-inflationary rate hikes pushing up loan rates, the Post‘s reporters have the answers.
The Post concludes:
The end result is a widening gap between those who can afford new cars and those who can’t. The average price of a new car in the United States hit $48,008 in March, up 30 percent from March 2020, according to Kelley Blue Book.
Automakers are selling fewer new vehicles in the United States than they did before the pandemic — about 13.9 million last year, versus 17 million in 2019. But their 2022 revenue were still $15 billion higher than in 2019, because the mix they are selling is more expensive, according to Cox Automotive.
If the publication had just one reporter to the right of Lin Biao on staff, it mightn’t have missed a rather crucial reason for the ascending cha-chings at the auto lot: U.S. regulators have increased the cost and size of automobiles via an alchemical stew of limiting supply, progressively asphyxiating standards, and propping up niche concepts and bloated frames through incentive programs.
A 2016 Heritage study found that the regulations then (not nearly as onerous as the ones most recently proposed) — in that valuable currency known as the pre-Biden dollar — increased the price of a new vehicle between $3,800 and $7,200.
As my favorite economist, David Gerard, says, when it comes to prices, the question is never not, “Well, is it supply or demand?”
For the U.S. government, the answer to that query has been “yes” in the worst way — down with supply and up with demand. The media omission of the government’s marketplace effects is annoying, personally, but much more importantly, offers the public an incomplete picture of a complex industry.