Hold onto your wallets, because the average price of a new car has officially surpassed $50,000 for the first time ever. But here's where it gets controversial: Is this a temporary spike or the new normal? Let's dive into the factors driving this staggering increase and what it means for your next car purchase.
According to Kelley Blue Book, September 2025 marked a historic milestone as the average cost of a new car in the U.S. crossed the $50,000 threshold. This isn’t just a random jump—it’s the result of a perfect storm of market forces. And this is the part most people miss: The expiration of the $7,500 electric vehicle (EV) tax credit at the end of September played a massive role. Consumers rushed to buy EVs before the incentive vanished, driving up the average price of new cars. After all, the average EV price sits at a whopping $57,700. Without the tax credit, experts argue that the overall average price should have dropped below $50,000. But did it?
Here’s the kicker: The pandemic’s lingering effects, including supply chain disruptions and semiconductor shortages, have kept prices elevated. Todd Duke, head of U.S. Autos at Credit Sights, explains that automakers prioritized producing more expensive vehicles during the pandemic due to limited parts availability. Meanwhile, auto tariffs have erased the cost advantage of manufacturing more affordable vehicles in Mexico, further squeezing budgets. The result? The average transaction price is now a staggering 30% higher than it was in 2019.
But it’s not just EVs and tariffs. SUVs are dominating sales, despite their higher price tags, and even luxury vehicles are seeing a surge in demand. Kelley Blue Book notes that purchases of vehicles over $75,000 were 1.5% higher in September 2025 compared to the same month in 2020. Bold question: Are we witnessing a shift in consumer preferences, or is this just a temporary reaction to market pressures?
Dealerships, however, aren’t exactly celebrating. Despite higher prices, profit margins on new cars remain razor-thin. Ernie Boch Jr. of Subaru of New England points out that dealerships aren’t making more money—in fact, they might be making less.
So, what does this mean for you? If you’re in the market for a new car, brace yourself for sticker shock. But don’t lose hope—there are still plenty of vehicles priced below $50,000. The key is to shop smart, compare options, and maybe even consider a used car if your budget is tight.
Controversial thought: Could this be the tipping point that pushes more consumers toward alternative transportation options like public transit or car-sharing? Or will the market eventually correct itself? Let us know what you think in the comments—we’d love to hear your take on this unprecedented shift in the auto industry.
