NEW YORK — Shopping around for a car? You’re in luck. Shopping around for a new auto insurance policy? Better buckle up. New, used and even rental car prices continue to slide while car insurance rates remain vastly elevated.
That diverging trend seems counterintuitive: If the price tag for a car has gone down, shouldn’t the cost to insure it go down too? If only it were that simple. In an aerial view, cars sit on the lot at the Howdy Honda dealership on March 18, 2024, in Austin, Texas. “It’s a mosaic of factors that impact auto insurance costs,” said Scott Shapiro, who leads KPMG’s US insurance division.
“While there is a general correlation between the price of the vehicle and insurance as it relates to physical damage, there are other factors beyond the price of the car that impact premium costs.” For instance, almost 41,000 people died in car crashes last year — 8,000 more fatalities compared to 2013, the National Highway Traffic Safety Administration estimated. That’s led to an increase in claims that are well above historical dollar amount averages because of their severity, according to LexisNexis Risk Solutions data.
Car insurance rates are up 18.6% for the 12 months ended in July, according to Consumer Price Index data released Wednesday. That marked the third-largest jump in prices over the past year across all goods and categories that CPI tracks.
Still, that’s an improvement from March, when car insurance rates were up 22.2% annually. The last time car insurance rates rose that much on an annual basis was in 1976.
But just like the overarching inflation across the economy, where the pace of price increases has cooled, the actual dollar amount consumers are paying for goods and services is much higher than in recent years. However, with cars, consumers are paying lower prices. That means price increases didn’t just slow down, car prices actually dropped.
Used car prices fell by 10.9% over the past year, marking the third-largest drop in prices across all goods and categories that the CPI tracks. Rental and new cars also got cheaper, with prices falling by 6.
2% and 4.4%, respectively. The steep fall in used car prices is a “direct reflection” of the new car market, Ivan Drury, the director of insights at Edmunds, said in an analysis published Wednesday.
Dealerships are taking longer to sell new cars compared to a year ago, resulting in discounts that are $1,000 higher on average. “A buildup of new vehicles on lots over the past year has been the catalyst for discounts and incentives on aging inventory,” he added. Eventually, this could translate into lower insurance rates, said Josh Damico, vice president of insurance operations at Jerry, a car insurance savings app.
“Car insurance premiums lag contributing factors such as prices for vehicles and repairs, so insurers have been playing catch-up over the past year or so,” Damico told CNN. Auto repair costs, while up 3.4% compared to a year ago, have cooled significantly from last July when they were rising at a 12.
7% rate annually, according to CPI data. With both those costs leveling off, “many insurers are reevaluating their pricing, with some already lowering their rates,” he said. ___ Take a stroll around a vintage car show, and you'll see pops of color everywhere.
You might spot a 1969 Plymouth Roadrunner in bright yellow, a common color in the muscle car era, or a 1975 Chevy Nova in sleek orange. But parking garages and driveways today are filled with white, gray, and black cars—so what gives? Have drivers become more boring and, therefore, now choose more muted colors for their cars? White tops the charts, with 25% of all new car registrations in 2023 being white, according to Edmunds. To see what colors hold sway today, CheapInsurance.
com compiled a ranking of the most popular car colors in America using data from Edmunds . Car colors were ranked based on their market share of new vehicle retail registrations to individuals in 2023. Neutrals still top the list of popular car colors, but there are some surprising shades when you get further down.
Historically, there are several forces at play when it comes to changing color preferences in cars, including the development of various painting technologies over the years, larger economic trends, and, of course, consumers' preferences, the Consumerist explained. Ford's original Model T was only offered in black since the black asphalt enamels used on the production line dried the quickest and were more durable than other oil-based options. Assembly-line innovations following World War I allowed for colored cars for the first time, and in 1923, Duco paint arrived on the scene, offering an additional array of beautiful colors.
Car manufacturers often hire color experts and assemble focus groups to hypothesize what might be the hot new color, but for the past several decades, black, white, and their child, gray, have led the way in sales. The recession in the early 2000s may have nudged consumers to more "neutral" colors, Barb Whalen, color and materials design manager at Ford Motor Company, told the Consumerist. Plus, Apple's sleek white tech products helped solidify the color (or lack thereof) as the hue of the future, as consumers may subconsciously decide to match their iPhone to their new Camry.
Gray, green, and white increased their market share over the past two years, according to Edmunds data. White increased only slightly but was still the most-purchased car color, with a staggering 25% of all new car sales to individuals being white. The data only included vehicle registrations to individuals, but white is also a popular color for corporate and government fleets .
While white cars can be challenging to keep clean, they are known to be the best when it comes to concealing dust and grime , potentially making white a safer bet for consumers who don't want to spend extra time and money maintaining their car's appearance. Gray and silver are "practical colors, yet are slightly more novel than white and black," Karl Brauer, Executive Analyst for iSeeCars, told Forbes . Gray and silver also have decent resale value, losing 22.
5% and 23.2% of their value over three years, respectively, as of June 2023, according to Chase . Perhaps surprisingly, Chase also notes yellow, orange, and red cars retain the highest resale values, likely because they are rare.
- Market share: 0.1% - Two-year change: -0.1% - Market share: 0.
2% - Two-year change: -0.1% - Market share: 0.2% - Two-year change: 0% - Market share: 0.
6% - Two-year change: 0% - Market share: 1.3% - Two-year change: -0.5% - Market share: 1.
8% - Two-year change: +0.4% - Market share: 8% - Two-year change: -1% - Market share: 10% - Two-year change: 0% - Market share: 11% - Two-year change: -1.6% - Market share: 20% - Two-year change: 0% - Market share: 21% - Two-year change: +1.
8% - Market share: 25% - Two-year change: +0.1% Story editing by Carren Jao. Additional editing by Kelly Glass.
Copy editing by Tim Bruns. Photo selection by Lacy Kerrick. This story originally appeared on Cheap Insurance and was produced and distributed in partnership with Stacker Studio.
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