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

New cars cost $48,841 on average in 2025. Adjusted for inflation, that's $6,823 less than 2021's peak, a 12.3% drop hidden by sticker shock. MoneyGeek analyzed Kelley Blue Book data to reveal how much buyers save compared to four years ago.

Sticker prices surged 30% since 2018, but the inflation-adjusted increase is only 1.9%. Car ownership costs include expenses beyond the purchase price. Fuel, maintenance and car insurance determine 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 buyers benefit from a market correction that's been three years in the making.

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

Midsize SUVs cost $48,650, $15,000 more than midsize cars at $33,524. The real price gap between these segments has shrunk 9.7% since 2018 when adjusted for inflation. Traditional sedans have been rising faster in real terms than SUVs, punishing buyers who want more affordable vehicles.

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

A new car costs 58.3% of the median American household's annual income. MoneyGeek compared the average new car price of $48,841 to the most recent data for median household income of $83,730 for 2024.

The average American needs to work 7 months to afford a new car, compared to 5.8 months in 2020. Real prices match near-2020 levels when adjusted for inflation, but the income-to-price ratio remains worse. Median household income hasn't grown enough to restore 2020's affordability levels.

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. Vehicle expenses include car payments, car insurance premiums and fuel. Buyers should put down 20%, finance for no more than four years and keep total car costs under 10% of income.

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

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

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

Only Mitsubishi achieved genuine price increases above inflation, reversing its previous 12.1% annual decline with an aggressive 18.9% jump.

Note: Tables show July 2025 sticker prices. When adjusted for inflation, even premium brands like Porsche and Land Rover cost less in real terms than their 2021 peaks.

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 four to seven years. A buyer financing $40,000 at 7% APR for 60 months pays $792 monthly. Interest charges add $7,520 to the total cost over the loan term.

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

MoneyGeek analyzed both nominal and inflation-adjusted prices to reveal the market's true direction. We analyzed transaction prices buyers actually pay, then adjusted them using Consumer Price Index data from the U.S. Bureau of Labor Statistics to show real purchasing power changes.

We analyzed monthly average transaction price reports from Kelley Blue Book (figures from 2018 through 2024 represent December of each year, while 2025 data comes from July), a leading automotive data authority. Kelley Blue Book collects actual sales data from dealers nationwide. 

• Historical Context: MoneyGeek pulled year-end data for seven 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. Monthly updates track market movements in near real-time.
• Inflation Methodology: We used CPI-U (All Urban Consumers) data to convert all historical prices to 2025 dollars. This approach reveals whether cars truly became more expensive or if general inflation created the illusion of higher costs.

Comparing inflation-adjusted 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.