Average New Car Price in 2025: $48,841, but Down 12.3% From Peak

New cars cost an average of $48,841 in 2025. Adjusted for inflation, prices fell $6,823 (12.3%) from 2021's COVID-driven peak, when chip shortages and supply chain chaos pushed prices to artificial highs. MoneyGeek analyzed 7 years of Kelley Blue Book data to show how the market corrected from pandemic distortions.

Sticker prices have jumped 30% since 2018. When converted to 2025 dollars, the sticker price increase shrinks to 1.9%. Car ownership costs include expenses beyond the purchase price. Fuel, maintenance and car insurance affect what buyers pay over time.

The $48,841 average masks a four-year decline most buyers miss. When MoneyGeek converted historical prices to 2025 dollars, we found the real peak happened in 2021 at $55,664, not 2024's nominal high of $49,740. Today's car buyers benefit from a 3-year market correction.

*Historical data (2018 to 2024) uses December figures for year-end consistency. The 2025 data, the most recent available, reflects July. This approach captures long-term trends and current market conditions.

The $48,841 figure represents a simple average of all new car prices. Buyers don't purchase vehicles equally across all segments. When we weight prices by what people actually buy, the picture changes.

The two averages:

• Simple Average: $48,841 (all vehicle prices averaged equally)
• Sales-Weighted Average: $47,800 (adjusted for actual purchase volumes)

This $1,041 gap between simple and sales-weighted averages exists because car buyers choose affordable models more often. Compact SUVs like the Toyota RAV4 and Honda CR-V lead sales at $36,517 average prices, pulling down the weighted average. Luxury vehicles above $75,000 represent smaller sales volumes than the simple average suggests.

Weighted by July sales volumes (9.5 million units, up 3.9% year-over-year), light trucks and SUVs claimed 82.3% of sales (up 6.5% year-over-year). Popular models in this segment, like the RAV4 and CR-V, drive sales growth at lower price points.

Real car prices dropped 12.3% from their 2021 peak, yet buying a car takes about the same portion of income as during the pandemic. The paradox isn't about time-to-purchase; it's about lost ground during recovery.

The numbers:

• 2020: 7 months of median household income needed ($39,259 car ÷ $67,521 income)
• 2025: 7 months of median household income needed ($48,841 car ÷ $83,730 income)
• Real price change: Down 12.3% from the 2021 peak
• The affordability problem: While months-to-purchase stayed flat, inflation eroded purchasing power for everything else.

The stagnation masks the real issue. Median household income grew 24% nominally but only 5% in real terms since 2020. Even with the 12.3% drop from peak, today's inflation-adjusted car prices remain above pre-pandemic levels. Families spend the same time saving for a car but have less money left for other expenses.

The 20/4/10 rule for car buying becomes difficult for many households at these price levels. The rule recommends keeping total monthly vehicle expenses under 10% of gross monthly income, which limits median earners to $700 monthly for all car expenses. After accounting for insurance and fuel, the remaining amount won't cover the $936 payment needed for an average new car.

Need affordable car insurance to help manage your budget? Compare rates from multiple insurers to find the best deal.

The average new car price varies by over $87,400 across brands, from Mitsubishi at $32,480 to Porsche at $119,907. This luxury-to-mainstream price spread has widened 15% since 2023, yet luxury car manufacturers maintain less pricing power in real terms than before.

Luxury vehicle manufacturers sacrifice real pricing power to maintain sales volumes in a challenging market.

These 7-month price movements reveal which brands gain or lose pricing power. While sticker prices barely moved, inflation during this period exposed the real winners and losers.

While real prices fell, consumer preferences work against buyers. Buyers choose SUVs over sedans more often, pushing the industry average higher as individual vehicle segments cost less in real terms.

Midsize SUVs cost $48,650, $15,000 more than midsize sedans, which cost $33,524. When adjusted for inflation, the real price gap between these segments shrank 9.7% since 2018. Traditional sedans rose faster in real terms than SUVs, hurting buyers who want more affordable vehicles.

Electric vehicles add volatility to overall pricing. Tesla prices reversed from growth to decline in 2025, with a 6.2% real price decrease after inflation adjustment. Electric vehicle pricing changes affect the overall market average as EVs gain market share.

The average car price represents just the starting point for buyers. Several factors affect the final out-the-door price and the total cost of ownership over several years.

• Upfront Costs: Buyers pay dealer fees, add-ons and sales tax beyond the MSRP. Trade-in vehicle value can reduce initial expenses. Dealer markups may add thousands to the final price in competitive markets.
• Long-Term Ownership Costs: Expenses continue after purchase for years. Finding competitive insurance rates helps buyers budget for ongoing costs, including fuel and routine maintenance. Unexpected repairs and cosmetic upkeep add to a vehicle's lifetime cost.
• Monthly Payment Breakdown: Most buyers finance their purchase over 4 to 7 years. A buyer financing $40,000 at 7% APR for 60 months pays about $792 monthly. Interest charges add $7,520 to the total cost over the loan term.

Here are answers to common questions about new car prices in 2025, from current market averages to brand comparisons and affordability guidelines.

MoneyGeek analyzed nominal and inflation-adjusted prices to reveal the market's true direction. We combined transaction price data with actual sales volumes to show what buyers really pay, then adjusted using Consumer Price Index data from the U.S. Bureau of Labor Statistics to show real purchasing power changes.

• Price Data: We analyzed monthly average transaction price reports from Kelley Blue Book, which collects actual sales data from dealers nationwide.
• Volume Data: We incorporated vehicle sales data from MarkLines Co., Ltd. to calculate sales-weighted averages. MarkLines tracks monthly U.S. automotive sales by manufacturer and segment, allowing us to determine which vehicles buyers actually purchase versus simple price averages.
• Historical Context: MoneyGeek pulled year-end data for 7 consecutive years, from 2018 to 2024. We applied CPI adjustments to convert all historical prices to 2025 dollars, revealing true affordability trends invisible in nominal prices.
• Current Market Snapshot: July 2025 data provides today's pricing landscape. We matched July transaction prices from Kelley Blue Book with July sales volumes from MarkLines to calculate the sales-weighted average of $47,800 versus the simple average of $48,841.
• Inflation Methodology: We used CPI-U (All Urban Consumers) data to convert all historical prices to 2025 dollars. This approach reveals whether cars became more expensive or if general inflation created the illusion of higher costs.
• Sales-Weighted Calculations: We multiplied each segment's average price by its sales volume, then divided by total sales to determine what the average buyer actually pays. This methodology reveals the $1,041 gap between advertised averages and market reality.

Comparing inflation-adjusted, sales-weighted prices revealed surprising trends: collapsing luxury premiums, real price decreases despite nominal increases and dramatic variations in brand pricing power. This analysis provides a more accurate picture of the new car market available to consumers and industry professionals.