On Sept. 21, David Ehrichman's 2016 Hyundai Genesis was totaled in a parking lot when a Land Rover passing by on the main road jumped the curb and smashed into his car. When he went back to the New York dealership where he'd leased the Genesis for $387 per month, he discovered it was now asking $565 a month for the new model, called the Genesis G80.
"I said to them, 'You've got to be kidding me; what's going on?' " Ehrichman said. "And they said, 'Well, the cars went up in price. We're not giving them away anymore.' "
Ehrichman is not alone in his surprise. Customers coming back to the new-vehicle market today are finding heftier price tags and higher interest rates. For those who are underwater on their loans, a new vehicle is even further from reach just as automakers start to pull back on incentives that could help. It's a conundrum for consumers and car dealers alike.
National Automobile Dealers Association Chairman Wes Lutz said affordability issues are prompting some customers who typically buy new to switch to leases or even late-model used vehicles.
"Sometimes you have to reset expectations. They're not going to get the vehicle they want," said Lutz, president of Extreme Chrysler-Dodge-Jeep-Ram in Jackson, Mich. "There is a pretty broad spectrum of trim levels, so we move them up and down trim levels. It's a major concern for us."
The affordability challenge is increasingly preventing customers who want new vehicles from getting them. Cox Automotive estimates that affordability hurdles have peeled several hundred thousand customers out of the new-vehicle market each year since 2016.
But though it will result in fewer new-vehicle sales for them, automakers are beginning to rein in incentives, particularly on cars. Incentive spending in the U.S. across all automakers dipped 2.7 percent for September, according to Autodata. But the spend was up 3.8 percent year to date, driven largely by light-truck incentives, which were 7.5 percent higher than year-earlier numbers.