“Every new car is a luxury purchase”
Part of the problem is that more Americans want expensive SUVs and pickup trucks with full options, he added, which can cost up to 40% more than the base price.
Over the past decade, luxury buyers have repeatedly proven their willingness to spend more on premium cars and the financing that comes with them.
Even the smallest upgrades have met growing demand, Drury said, citing extreme enthusiasm for the Honda Odyssey’s built-in vacuum option when it was introduced in 2014.
Various packages, or trim levels, offer a range of features meant to appeal to different buyers, such as upgraded safety features, bigger engines, or upscale finishes like leather seats and better stereos.
Now everyone wants high-tech touchscreens, ambient lighting, 360-degree cameras and heated and cooled seats, Drury said, which costs even more. “Fewer and fewer people want something basic.”
With the lucrative luxury segment in high demand, automakers are upgrading their lineups and slashing cheaper cars.
“Basic models, while attractive in theory, rarely hit the streets,” Drury said. “Every new car is a luxury purchase at this point.”
“Who do you blame: the consumer buying these options, the dealers ordering these cars, or the automakers making fewer base models?” he said.
As more people are shut out of the new-car market, automakers could start testing cheaper alternatives, he said, although if there’s a lot of consumer interest, that could also drive up the price of these models.
For now, the best way to get a base model is to order it directly from a dealership, Drury advised.
“There could be a perfectly good substitute at about half the cost,” he said.