Americans took on more new car loans and leases in March 2021 than in any previous month on record, according to Equifax data cited by Kelley Blue Book.
As the COVID-19 pandemic subsides, more Americans are eager to get back behind the wheel and hit the road. This has driven increased demand for new cars, trucks, crossovers and SUVs, with lenders issuing a record number of car loans and leases in March. Additionally, the total balance owed on those vehicle loans also hit a record high in March to $73.6 billion. March is the latest month for which auto loan data is available.
Consumers are also paying top-dollar for vehicles. According to KBB, new vehicles sold at an average of 99.9% of the manufacturer’s suggested retail price (MSRP) in June – a sign that automakers are able to easily move product without having to offer incentives and other discounts to entice buyers. KBB says the average transaction price of a new car also hit an all-time high in June at $42,258.
It’s not just new vehicles, either. Demand for used cars has been strong in recent months as well. The average price of a used car reached an all-time high in June of $24,414 – up from the previous all-time high in May of $22,568. That figure was also up by nearly 25 percent from the same time period in May 2019 and May 2020.
High demand for new vehicles has compounded with low production output at assembly plants, resulting in low inventories at dealerships nationwide. This has forced more consumers to turn to the used market to find the vehicle they want, driving up demand for used car loans as well.
An automotive analyst for Cox Automotive, Jonathan Smoke, told KBB this sales trend will continue in the coming months and years.
“The sales frenzy is over, but we’re settling into a more normal and predictable pattern of strong demand that should grow into the future,” Smoke explained.