Marc UrbanoCar and Driver
From the January 2021 issue of Car and Driver.
There’s a lot of talk about bubbles these days. Who’s in yours? Is there room in theirs? Is it possible to move one to the beach for a different view and warmer weather?
A few months ago, the Car and Driver staff had a chance to emerge from our bubbles and gather in Pinckney, Michigan, to test cars and trucks for our annual 10Best awards. It was my favorite two weeks of 2020. We hadn’t seen one another in ages. We hadn’t gotten to compare notes in person or have the kinds of conversations and debates that spring up naturally in the office. It wasn’t an NBA-style bubble, where everyone is tested and isolated from the rest of the world. But when you’re inside the 10Best universe, it’s easy to forget real-world issues, be they pandemic related or the prices of all the toys we’re so lucky to drive.
We set a cap of $90,000, the same as last year. The average as-tested price of the vehicles at 10Best came out to about $57,000, well above what today’s car buyers are spending. Yes, it was fun to loop country roads in those pricey vehicles, but it can also be distorting.
The average price of cars at 10Best is always above the average new-car transaction price because we’re not just looking at mass-market vehicles. But today’s car buyers are spending a lot of money and taking out longer and longer loans to finance their purchases. The average loan length has grown to 72 months, or six full years, according to Experian. This fall, Kelley Blue Book reported that the average transaction price of a new car was more than $38,000, up from $29,000 a decade ago. That’s a 31 percent increase, well outpacing inflation. There hasn’t been a car with a base price below $10,000 since 2006, and even then, the Chevy Aveo wasn’t going to make it to the 10Best podium.
Given the economic uncertainty of our times, it would seem like good business sense to keep prices manageable for consumers. But the fact that prices just keep going up makes you wonder if we’re in the middle of a sales bubble that may be about to burst.
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