Used cars aren’t supposed to cost this much.
After years of inflation, supply shocks and new import tariffs, the average three-year-old vehicle now sells for about $31,000 (1) – a price tag that used to belong to something brand new. So why not just walk into the dealership and grab a fresh one off the lot instead?
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Because that “new car smell” is getting painfully expensive.
A new Kelley Blue Book report (2) shows the average transaction price for a new vehicle hit $50,080 in September – the first time it’s ever crossed the $50K mark. That’s up 3.6% from last year, continuing a climb that’s left even high-income buyers wincing. And while it’s tempting to blame tariffs or labor costs, experts say the real story runs deeper – one driven by consumer demand, shrinking inventory and automakers’ quiet pivot toward bigger, pricier models.
What’s fueling the prices?
According to the report, the high costs are being driven by expensive electric cars and luxury and higher-end vehicles.
“The $20,000-vehicle is now mostly extinct, and many price-conscious buyers are sidelined or cruising in the used-vehicle market. Today’s auto market is being driven by wealthier households who have access to capital, good loan rates and are propping up the higher end of the market,” said Erin Keating, an Executive Analyst with Kelley-owned Cox Automotive. (3)
“We’ve been expecting to break through the $50,000 barrier. It was only a matter of time, especially when you consider the best-selling vehicle in America is a pickup truck from Ford that routinely costs north of $65,000. That’s today’s market, and it is ripe for disruption."
Tariff talk triggered a mini buying frenzy (4) this spring, but it hasn’t hit 2025 sticker prices yet. That wave is expected to wash over 2026 models, (5) though automakers say the price hikes aren’t about costs on the factory floor but instead reflect the value of a new model year.
Plus, analysts say any price increase would be “moderate”, and wouldn’t come close to covering automotive tariffs.
“They already had issues selling the inventory they have on hand, let alone if they raised the price by more than 10%,” Ivan Drury, Director of Insights at Edmunds, an online resource for automotive information, told CNN. (5) He said if automakers must increase prices to cover production costs, it won’t necessarily be on the sticker price.
“The sticker price is the last place they want to put the increase,” Drury said. Instead, automakers are finding subtler ways to raise prices – adding new fees, trimming cheaper trims and packing showrooms with higher-end models that nudge buyers toward luxury options.
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Should I buy now or hold off?
Between tariff chatter and the latest Kelley Blue Book data, it’s easy to think you should rush to the dealership before prices climb higher. And yes, there are perks to buying now: inventories are improving, (6) and you might snag a deal before the 2026 models – and their steeper price tags – arrive. But there’s no need to panic. The market isn’t shifting overnight, and patience could still pay off.
If you’ve got your heart set on a new car but don’t want to fork over fifty grand, start by shopping around for financing. Credit unions and online lenders often beat dealer rates, which can save you thousands over the life of a loan. And when you’re sitting across from a salesperson, focus on negotiating the sticker price, not the monthly payment. Stretching out your loan term might make those payments look smaller, but it’ll cost you more in the end.
As for those fancy add-ons? Consider skipping them. Upgraded wheels, leather packages and tech bundles can tack thousands onto the price tag without adding much long-term value. Stick with the standard trim and you’ll keep more cash in your pocket for things that actually matter, like maintenance, insurance or your next down payment.
Consider used
A brand new, never-used car is enticing, but remember that its value depreciates as soon as you leave the lot, and you could end up owing more than the car is worth. Plus, the high sticker price also comes with higher taxes, insurance and registration costs.
Buying a used car does not have to mean shopping at sketchy lots and taking home a beater. There are plenty of nearly-new used cars that could save you thousands. And if you go the certified pre-owned route, you’ll likely get warranty coverage that protects your wallet – and your peace of mind – long after you leave the lot.
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Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
Business Insider (1); Kelley Blue Book (2); CNN (3, 4, 5); S&P Global (6)
This article originally appeared on Moneywise.com under the title: New car buyers can expect to pay at least $50K for the first time ever — does that mean you should wait to buy?
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.