Quick Facts About New Car Prices
- Cox Automotive’s Erin Keating said she expects a 5% increase in the prices of vehicles not subject to the full 25% tariff, and new vehicles directly impacted by the 25% tariff would see price increases of between 10% and 15%.
- New car average transaction prices increased in April from the previous month and are more than $10,600 higher than pre-pandemic times five years ago.
- Shoppers could find great deals on electric cars and overstocked new cars from brands like Jaguar, Ram, Mitsubishi, Infiniti, and Land Rover. Some shoppers may see average car-buying incentives of about $3,300.
If you’re currently shopping for a vehicle, it’s a tough market with less inventory and fewer incentives. As a result, you may want to hurry up and find the vehicle you want before tariffs affect prices further. Our experts predict tariffs could push up car prices in the next few months.
Tariffs of 25% on all auto imports began April 3, just as the spring car-buying season kicked into high gear. The White House eased tariffs on car parts, but they could still hurt imports from outside North America. Any production disruptions from tariffs, which we are seeing, could send car prices soaring. In April, some vehicles piled up at ports, and a few manufacturers instituted a production freeze. Still, carmakers like Hyundai pledge to keep prices the same until June 2. Ford began increasing prices on several models made in Mexico.
In recent years, car shoppers have become accustomed to paying more than the manufacturer’s suggested retail price (MSRP). They watched car prices skyrocket with no apparent end in sight. Though prices started to drop, they now appear stuck in neutral. The situation left many shoppers scratching their heads, and the question our experts hear most is, “When will new car prices drop?”
New vehicle price inflation all but disappeared by the end of last year. Still, car prices have increased dramatically since pre-pandemic times. Read on for guidance if you plan to purchase a vehicle, as we dig deeper to answer concerns about car prices if you need to shop for a car right now.
New Car Prices Climbing Higher
Kelley Blue Book data shows average transaction prices were $48,699 in April, up 2.5% from the month earlier, and slightly higher than last year at about 1%. Incentives to attract shoppers to new vehicles were 6.7%, or nearly $3,300. That’s down from 8% earlier in the year.
RELATED: Tracking Car Prices During Tariffs
Overall, average transaction prices are $10,600 higher than in April 2020, just as the COVID-19 pandemic gripped the nation. At that time, the average transaction price for new vehicles was $38,060.
And in the coming months, Cox Automotive analysts predict prices could soon rise.
“Ever since President Trump announced auto tariffs … the cost of new cars has been steadily climbing. Even though there was a surge in shopping and sales early on, the manufacturer’s suggested retail prices haven’t budged,” said Cox Automotive Executive Analyst Erin Keating. “The pricing landscape is varied depending on the automaker, car segment, and specific models — some are cutting incentives, others are in high demand, and the supply isn’t evenly distributed across the board.”
Cox Automotive is the parent company of Kelley Blue Book.
The volume-weighted average transaction calculation reflects all the car market realities, including high-volume vehicles, like pricey pickup trucks, influencing the number. For example, the report shows that full-sized pickups posted an average transaction price of about $64,200.
Additionally, electric vehicles posted average transaction prices of an estimated $59,255 in April. The nation’s largest electric vehicle (EV) seller, Tesla, sold more than 45,000, representing the brand’s best month this year, due mostly to sales of the refreshed Model Y. Tesla’s average transaction price increased an estimated 1.3% year-over-year to $56,120.
What Drives New Car Prices
- Inventory availability
- Manufacturer incentives
- Dealer discounts
- Trade-in vehicle value
New Car Inventory Update
According to the Cox Automotive vAuto Live Market View, tariffs triggered a surge of car sales in March and early April, before tapering off at the start of May. Inventory decreased 7.4% month-over-month to a new car supply of 66 days by the end of April. While you’re likely to find plenty of vehicles from Jaguar, Ram, Mitsubishi, Infiniti, and Land Rover, you’re less likely to find the exact model you may want from Lexus, Toyota, and Honda.
Dealerships track what new vehicles they have on hand to sell using a measurement called “days of inventory,” or how long it would take them to sell out at today’s sales pace if they stopped adding new vehicles.
So far in May, Cox Automotive data points show inventory has fallen about 10.5% from a year ago. Our experts say that inventory is not being replenished at the same rate as sales rise from the typical spring bounce. Some automakers delayed deliveries and halted production in the past several months as they grappled with new tariff policies.
Market Uncertainty: Shoppers Grabbing Deals
Amid the 25% tariffs on imported cars, the new-car landscape has dramatically shifted in the last several months. Shoppers appear to be pushing up their car buying needs to snap up existing deals before the full trickle-down effect of tariffs.
“Concerns about potential future vehicle prices due to tariffs led to a surge in March sales, and April began with similar robustness,” said Charlie Chesbrough, senior economist with Cox Automotive. Data from Cox Automotive shows that new vehicle sales rose 22% ahead of last year on a seasonally adjusted basis, and more than 8% through early April on a volume basis.
We’ve seen several production and shipping delivery disruptions with reports of paused shipments and auto production lines, temporary layoffs, and even a canceled car. Volkswagen reportedly will add a tariff “import fee” as a line item on window stickers of its cars. Meanwhile, Hyundai and Genesis plan to hold the line on raising the manufacturer’s suggested retail price (MSRP) until at least June 2. However, 2026 Hyundai models will no longer come with complimentary maintenance of three years or 36,000 miles. Other news reports show Ford sent a notice to dealers about increasing prices up to $2,000 on Mexico-produced vehicles like the Mach-E, Bronco Sport, and its least expensive pickup, the Maverick.
RELATED: Trump Slightly Eases Car Tariffs
Shoppers heading out to purchase a new vehicle should watch dealership pricing. While carmakers set the stage for pricing, dealers ultimately close deals. They could easily add markups or dealer fees to compensate for any losses they could incur due to tariffs along the way.
Cox Automotive data suggests the top 5 impacted vehicle models based on 2024 sales volume and exposure to tariffs are:
- Subaru Forester
- Honda HR-V
- Honda CR-V
- Chevrolet Trax
- Chevrolet Equinox
For now, new car buyers should search for incentives and cashback deals and expand their shopping boundaries, if needed, to find the right deal for their budget. Qualified buyers with stellar credit will discover low-interest-rate offers and lease deals, including on new electric vehicle models left over from 2024.
Creditworthy buyers can secure deals on last year’s EV models, like a 2024 Kia EV6 with 0% APR financing and $1,000 cash back for up to 72 months, good through June 2.
Shop Around for the Best Offer on Your Trade-in
Trade-in value is another factor driving car prices. A lack of used vehicle stock has kept those prices higher, giving credence to the idea that buying a new vehicle might be cheaper than purchasing a certain used model, only a few years old. As a result, it’s still a great time to trade in your car.
Dealers value your trade-in partly based on what they need in stock. On the flip side, they’re more likely to offer an excellent deal to buyers on a car that fewer people are looking for currently. In other words, a car shopper trading a 2018 Honda Civic for something else will be much happier with the trade-in appraisal than one with a 2021 Jeep Grand Cherokee.
Car buyers should prepare to shop their trade-in around. It’s slightly more complicated to pull off, but selling your old vehicle to one dealership and buying your new car from a different one may make sense if the final invoice numbers work out in your favor. Use the Kelley Blue Book Instant Cash Offer tool to shop your trade-in vehicle at nearby dealerships. When you let the deals come to you, selecting the best trade-in offer for your situation is easier. Remember, you can always negotiate the offer, and pitting one offer against the other is not unheard of.
The Higher Costs of Car Insurance
With tariffs on imported cars and some car parts, it’s likely auto insurance rates will climb higher, even as car owners are already stretched to their limits on insurance costs. According to the Bureau of Labor Statistics, car insurance costs were 6.4% higher in April than a year earlier. Bankrate says car insurance averages about $2,692 a year for full coverage. Full coverage, called comprehensive car insurance, covers natural disasters like wildfires, hurricanes, and accidents. Before you seal the deal and sign anything for a new vehicle, compare quotes for car insurance.
What to Expect: Looking Ahead
There’s so much to digest here, and it’s hard to know what to expect exactly, except for a chaotic future for car buying. Economists initially forecast two interest rate cuts in 2025, after three last year. However, it’s anyone’s guess what could come, or nothing at all could happen. At the recent Federal Reserve meeting in May, the nation’s central bank held rates steady.
“New-vehicle affordability declined in April to the worst level yet this year as the bite of higher prices and lower incentives turned around an improving trend,” said Cox Automotive Chief Economist Jonathan Smoke. “After steady improvements in affordability throughout 2025, we saw a significant setback in April with median weeks of income needed to buy an average new vehicle increasing by a full week.”
He added, “Consumers are far more price and payment-sensitive than they were back in 2021,” during the pandemic. With that in mind, car shoppers “may soon join the [Federal Reserve] in waiting to see what happens,” Smoke said.
What to Do if You Need a Car Now
For now, go shopping for a new car before manufacturers potentially increase vehicle prices or dealers take matters into their own hands. Before buying, research your options and look for deals, especially on last year’s models, which are still plentiful on car lots. Make sure to shop ahead for a car loan if you’re not paying cash.
RELATED: Paying Cash for a Car in 2025: Consider the Pros and Cons
Editor’s Note: This article has been updated for accuracy since it was initially published.
link