Thinking About Buying A Car? Think Again.

Getting your permit at 15½ and your license once you turn 16 is something many underclassmen look forward to. Being able to drive you and your friends around wherever you please is a privilege at that age. However, with recent economic events, has this luxury succumbed to collateral damage because of inflation? 

With rising car and gas prices, increased tax rates, and a potential recession, there’s a lot more to worry about when getting your license, both globally and economically. Due to the war between Russia and Ukraine, the cost of crude oil jumped in response to the invasion, hiking up gas prices. Currently, the tax rate has been increased up to 7.25% by the Federal Reserve in the past few months to combat inflation. In addition to how expensive insurance for a new driver at 16 costs (about $300-400) would increase in the probable event of any accident, no matter how minor it may be. Buying your own car, new or used, costs more now than ever. Additionally, microchips in cars decreased in manufacturing since the Covid-19 pandemic; the chips act as the brain in modern electronics and work as an electrical circuit to control the flow of electrons, making used cars more popular, since they already contained the chip. 

Though there may be hope in the future after 2022, “While new car prices declined -1.4% in September from August’s all-time high, they will likely remain elevated through the end of 2022 as inflationary pressures persist, before easing slightly in 2023.” But for now, car shoppers continue to remain stagnant with rising prices, “Consumers express record low sentiment toward the purchase of a new vehicle, citing high prices and rising interest rates.” Generally, the automotive sector will continuously experience a “lower volume, higher price” dynamic for the next few years due to the pandemic and its aftermath.

The future of the automobile industry may change to run on cleaner energy to adapt to this shortage. Perhaps a better alternative to the car chip will be found, making it easier and more affordable for consumers and dealerships. Considering all ongoing events, the best move right now may be to save as much money as possible for a reliable car in the future. After all, impactful economic events have passed. However, getting your license shouldn’t lose its spark and excitement, just drive your dad’s Honda!