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The Cost of a New Car Won’t Be Dropping Anytime Soon

Transaction prices hit record highs, especially for luxury cars.

Used vehicles for sale on Jan. 4 at a dealership in Detroit.

Used vehicles for sale on Jan. 4 at a dealership in Detroit.

Photographer: Matthew Hatcher/Bloomberg

Last year’s record-high car prices won’t be dropping soon.   

In December, the average price of a new vehicle in the U.S. hit $47,077, up 14% ($5,742), compared to 2020, and up 1.7% ($808) from the previous month, according to Kelley Blue Book. The rise came as U.S. inflation ended 2021 at sizzling levels—a 39-year high of 7%—with gasoline topping the charts with a 49.6% price increase from the prior year. The higher prices for autos, food, and apparel, among other things, reflect the pains of a reopening economy. Last year’s surge in car prices came as component shortages hit automakers just when consumer demand was soaring.