At the gas pump this week, I encountered my first “I did that” sticker. Sold on Amazon and other e-commerce websites, it shows an image of President Joe Biden pointing — at the price of the gas.
Like the viral “Let’s Go Brandon!” campaign that swept across red America this fall, the sticker is a hard dig at Democrats and their policies, softened ever so slightly with humor. But that sticker — and the companion one featuring Nancy Pelosi — won’t hurt this administration as much as the lingering effects of sticker shock in the car-buying universe.
Thanks to a transmission that left this world all too soon, I was thrust into this cold, barren landscape last week. The terrain is unrecognizable from how it looked when I last bought a car at Christmastime six years ago.
Car lots have vast swaths of open pavement. Websites promise vehicles “in transit” or “coming soon.” Some well-equipped Jeeps — Jeeps! — are going for more than $100K, nearing the median price of a single-family home in West Virginia. Most disturbingly, some dealers are setting their prices more than $10,000 more than the manufacturer’s suggested retail price, or MSRP.
Asked about this, sales associates shrug and say “chip shortage” or “inflation,” which may be true, but is dismissive of the bigger problem here, which is that millions of Americans are about to be seriously underwater in their cars, just as they were in their homes in 2009.
“Everything is so expensive now,” one salesman said solicitously. “It’s inflation. I was just shopping for seafood for Christmas Eve, and I couldn’t believe the price of scallops.”
When I pointed out that he won’t be trying to trade in those scallops for new ones in four years, the salesman had no answer. Not that I’m not sympathetic to supply chain problems in seafood. But it’s not an apt comparison. Scallops can’t be repossessed.
December is usually one of the best times to buy a car, but not this year. Even before the chip shortage, the average new car payment had been creeping up, to where it is now: nearly $600 a month, just slightly less than what my first mortgage payment was 30 years ago. Consumer Reports says that vehicle debt in the U.S. has skyrocketed over the past 10 years and now exceeds $1.4 trillion. For context, that’s more than the gross domestic product of Australia.
Also increasing is the number of people who are underwater in their car loans the moment they drive off the lot, more than the usual depreciation. “Almost half — 46% — of the loans in the data we reviewed were underwater; that is, people owed more on the car — $3,700 on average — than what the vehicle was worth,” Ryan Felton wrote for Consumer Reports.
Moreover, many people are now financing new cars for six or seven years, meaning that their car could be ready to be cubed before they’ve finished paying it off. This is, in part, because the average price of a new car is at a record high, $45,000; used cars, too, are setting records at an average price of $25,000. Both new and used vehicles are up around $5,000 from just last year.
It’s so bad out there that financial advisers are giving this stark warning: Don’t buy a car unless you have no other option.
“If your car works and can get you to work, then stick with it,” certified financial planner Jay Zigmont told Megan Leonhardt of Yahoo!Finance.
In this bleak consumer landscape, the good news for Biden is that people are keeping their cars longer than in the past, so they may not realize the financial devastation wrought by a new car purchase until well after the midterms. The average age of vehicles on the road is 12, The Wall Street Journal reports, and elderly cars that in years past might have already gone to the junkyard are showing up on dealer lots.
That said, I was unprepared to come across an ad for a Toyota with 250,000 miles with a price tag of $7,000, offered by a dealership.
Did Joe Biden do that? Technically no, the pandemic and resulting supply chain problems, along with labor shortages, are said to be responsible. (Throw in the unmitigated greed of Big Auto if you are an anti-capitalist.)
But in future elections, Americans may well blame Biden, or his party’s policies. In July, the president showed a bewildering disconnect from everyday consumer concerns when he said, wrongly, that car prices had returned to what they were before the pandemic. A majority of Americans disapprove of how he’s handling the economy. With cars the second largest purchase that most Americans will ever make, some car-poor Democrats may be a repossession away from voting Republican in 2024.