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How inflation and higher interest rates have reshaped car buying for many Americans


Cars are displayed on the sales lot Serramonte Subaru on May 16, 2023 in Colma, California.Justin Sullivan | Getty ImagesThe Federal Reserve’s battle to taper inflation by ratcheting up interest rates is limiting who can afford to purchase a new or used vehicle.The rate hikes have many Americans lowering their buying expectations, opting for used vehicles over new, or fixing their current car or truck instead of purchasing a replacement.It’s hitting lower-income consumers, with credit scores below 620, the hardest, according to data insights firm Cox Automotive.”We continue to see subprime buyers squeezed out of the auto market by the Fed repeatedly moving rates higher. The 10 consecutive rate increases have limited who can buy vehicles to mostly high-income, high-credit-score buyers,” said Cox chief economist Jonathan Smoke.At various points in 2018, subprime buyers made up more than 14% of new vehicle sales, while deep subprime buyers made up close to 10% of the market, according to Cox. This year, subprime buyers account …

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