A car dealership lot with Ram pickup trucks.
The cost of both new and used cars is expected to remain higher than average throughout 2022.
The increased prices are attributed to high demand for automotives, paired with inventory constraints.
President Biden said in a speech this week that he is working to alleviate bottlenecks driving up costs.
Skyrocketing prices for both new and used cars show no sign of slowing, and experts say the higher-than-average costs are expected to continue throughout 2022.
The cost of cars has climbed globally in recent months in response to heightened demand and inventory constraints, exacerbated by reduced supply of chips that are integral to automobile production. Labor shortages have also impacted the rate at which car manufacturers can produce vehicles, further driving up costs.
Tyson Jominy, head of data and analytics for J.D. Power, told CNBC that an estimated 89% of car buyers are paying above sticker price or within 5% of it, noting that consumers should expect to see higher prices throughout the rest of the year.
"The typical dealership experience that consumers are familiar with — walking dealer lots with rows and rows of cars, negotiating over price and getting many incentives — is not likely to return this year because there are 4.5 [million] to 5 million consumers on the sidelines waiting for cars," Jominy told CNBC.
With demand for cars on the rise, many automobile sellers have also cut traditional sales or deals, contributing to increased costs, CNBC reported. According to data from Edmunds, an online data base for automotive inventory and information, the average selling price of a new car is $45,872, higher than the average manufacturer's suggested retail price of $45,209.
In a speech on Friday regarding the December 2021 jobs report, President Joe Biden said his administration is working to alleviate bottlenecks to drive down car prices, with efforts focused on building better factory infrastructure and stimulating domestic production.
"I'm not an economist, but I've been doing this a long time," Biden said. "But here's the way to look at it. If car prices are too high right now, there are two solutions: You increase the supply of cars by making more of them, or you reduce demand for cars by making Americans poorer. That's the choice."
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