Car prices have skyrocketed. Among the reasons is pent-up demand due to the inability to shop during the worst of the COVID-19 pandemic and very low interest on auto loans. Beyond that, and perhaps more important, there is a huge shortage of the chips used in many car electronic systems. Some of the world’s largest car companies have had to shutter their assembly lines and announce that their 2021 revenue will be short of expectations. The average number of days a car stays on a dealer lot in American has dropped close to 30, which is remarkably low by historic standards.
doxo recently published its doxoINSIGHTS’ reports on the Auto Insurance industry and the Auto Loans industry. Among the things it measured in part of this report called the Car Ownership Share of Household Income rankings were the most expensive cities to own a car. The authors calculated “the sum of average monthly auto insurance and average monthly auto loan costs compared with average monthly household income.”
A related number, personal income, varies widely from metro area to metro area, which puts the report into some context. According to the Census, the metro with the highest figure is Washington at just above $47,000 followed by San Jose at just above $40,000, At the other end of the spectrum, the number in McAllen TX is just below $10,000.
doxo restricted its analysis to 25 markets. In these, it considered the average monthly payment for car insurance, the average monthly payments on car loans, and then took these are a percentage of monthly household income.
The metro with the highest ratio between cost and income was Orlando at 14.1%. Very close behind it was Miami at 14%. At the far end of the spectrum, the figure in San Fransico was 7.5% and in Washington, D.C., 7.9%.
Among America’s largest metros, the number was 10.2% in New York City (the largest metro), which is the same as the figure in Los Angeles (the second largest). In Chicago, the third-largest city, the figure was 10.4%.
Presumably, these figures will get worse. Car prices are not only at a historic high. They continue to rise rapidly. And, the chip shortage that has helped push them up is expected to last until the end of this year, and perhaps into 2022.