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The Indicator from Planet Money · January 13, 2025 · 9m
Why Are Cars Still So Expensive?
The Indicator explores why new car prices remain elevated at $49,000 average despite the supply chain normalization. The team traces the cause: automakers discovered during COVID that selling fewer, more expensive cars is more profitable than selling more, cheaper ones.
This summary was generated from show notes and public descriptions, not from a full transcript review. Details may contain inaccuracies.
Canon
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The team argues that the lack of consumer backlash to $49,000 average car prices confirms the hedonic treadmill: consumers adapted to sticker shock, accepted longer loan terms (average now 72 months), and stopped comparing to pre-COVID prices.
Highlights
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Automakers learned from COVID that scarcity is more profitable than abundance — and they're not going back
The team explains that during COVID chip shortages, automakers were forced to sell fewer cars at higher prices. They discovered this was more profitable than the old model of high volume and thin margins. Now they're deliberately maintaining higher prices and lower inventory.Was this useful?