New Car Prices Surge to $48,422, Leaving Many Americans Excluded from the Market

Americans are increasingly getting priced out of the new car market as prices remain elevated.

The average transaction price for a new car in April 2025 was $48,422, slightly higher than the average for the previous 12 months, according to Edmunds data published in June 2025. This figure highlights a significant price disparity when compared to used cars.

In fact, the average transaction price for new cars was more than 29% higher and 35% higher compared to 3-year-old used cars in April 2025 than in April 2020, according to Edmunds sales data.

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Despite these high prices, dealers appear to be offering some discounts to try and get new cars off the lots. The Manufacturer’s Suggested Retail Price (MSRP) averaged around $50,408 during April 2025, indicating that some discounting was indeed occurring, according to Ivan Drury, Edmunds Director of Insights.

The average transaction price for new cars was more than 29% higher and 35% higher compared to 3-year-old used cars in April 2025 than in April 2020. (iStock)

Automotive expert and analyst Brian Moody told FOX Business that the rising prices of new cars are driving buyers toward used vehicles or even compelling them to hold onto their current cars.

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This trend is also evident in the demographics of new car buyers. Nearly 19.2% of new-car buyers are now opting for luxury brands, according to iSeeCars, a significant increase from the 11% to 12% range prior to the pandemic, based on Cox Automotive data.

Nearly 19.2% of new-car buyers are now choosing luxury brands, according to iSeeCars. (Andrej Ivanov/Bloomberg via Getty Images)

One significant factor contributing to the rising costs of new cars is the increasing complexity due to government compliance, fuel economy standards, safety equipment, and smart technologies. Moody notes that tariffs are also inflating prices on certain models that source parts or are manufactured overseas.

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However, Moody believes that a “technology plateau” is occurring with new cars, which may reduce the incentive to purchase new over slightly used vehicles. He states, “Once you get self-driving features like Super Cruise and Blue Cruise, along with standard tech like Apple CarPlay, back-up cameras, and collision detection, what’s the difference? A 4-year-old minivan is likely to have the same tech as a brand-new car.”

Used vehicles for sale at a dealership in Colma, California. (David Paul Morris/Bloomberg via Getty Images)

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As a result, many automakers may need to explore alternative strategies to reduce prices, as the upcoming models may not offer anything groundbreaking in terms of technology. Moody emphasizes that many executives are already aware of the necessity to find ways to lower their vehicle prices.

Americans are increasingly getting priced out of the new car market as prices remain elevated.

The average transaction price for a new car in April 2025 was $48,422, slightly higher than the average for the previous 12 months, according to Edmunds data published in June 2025. This figure highlights a significant price disparity when compared to used cars.

In fact, the average transaction price for new cars was more than 29% higher and 35% higher compared to 3-year-old used cars in April 2025 than in April 2020, according to Edmunds sales data.

NISSAN RECALLING OVER 26,000 VEHICLES DUE TO DOOR ISSUE THAT COULD INCREASE RISK OF CRASH

Despite these high prices, dealers appear to be offering some discounts to try and get new cars off the lots. The Manufacturer’s Suggested Retail Price (MSRP) averaged around $50,408 during April 2025, indicating that some discounting was indeed occurring, according to Ivan Drury, Edmunds Director of Insights.

The average transaction price for new cars was more than 29% higher and 35% higher compared to 3-year-old used cars in April 2025 than in April 2020. (iStock)

Automotive expert and analyst Brian Moody told FOX Business that the rising prices of new cars are driving buyers toward used vehicles or even compelling them to hold onto their current cars.

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This trend is also evident in the demographics of new car buyers. Nearly 19.2% of new-car buyers are now opting for luxury brands, according to iSeeCars, a significant increase from the 11% to 12% range prior to the pandemic, based on Cox Automotive data.

Nearly 19.2% of new-car buyers are now choosing luxury brands, according to iSeeCars. (Andrej Ivanov/Bloomberg via Getty Images)

One significant factor contributing to the rising costs of new cars is the increasing complexity due to government compliance, fuel economy standards, safety equipment, and smart technologies. Moody notes that tariffs are also inflating prices on certain models that source parts or are manufactured overseas.

SMALL BUSINESS ADMINISTRATION UNVEILS NEW INITIATIVE TO ROLL BACK FEDERAL REGULATIONS

However, Moody believes that a “technology plateau” is occurring with new cars, which may reduce the incentive to purchase new over slightly used vehicles. He states, “Once you get self-driving features like Super Cruise and Blue Cruise, along with standard tech like Apple CarPlay, back-up cameras, and collision detection, what’s the difference? A 4-year-old minivan is likely to have the same tech as a brand-new car.”

Used vehicles for sale at a dealership in Colma, California. (David Paul Morris/Bloomberg via Getty Images)

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As a result, many automakers may need to explore alternative strategies to reduce prices, as the upcoming models may not offer anything groundbreaking in terms of technology. Moody emphasizes that many executives are already aware of the necessity to find ways to lower their vehicle prices.