A house and a car in the garage have been symbols of the American Dream for quite some time, but getting there is increasingly costing more money. That’s especially true if it’s a fresh set of wheels, with prices rising steadily for more than a year now. In fact, the average price of a new car in the U.S. just soared past $50,000 for the first time, according to the latest Kelley Blue Book report.
Is it really? Factoring in inflation, the prices of many cars today seem like a bargain compared to recent decades, and they come with more tech features, fuel efficiency, and baseline standards. For example, the popular Toyota Camry (NYSE:TM), which cost $17,000 back in 1995, sells for $28,000 today, but in 1995 dollars it would only cost $13,000 in 2025. The same goes for SUVs like the Ford Explorer (NYSE:F), which had a price tag of $20,000 in 1995 and $40,000 in 2025, but in 1995 dollars would only cost about $19,000 today. EV sales are rising before the tax credit expires—but what happens next?
It’s mainly the result of production efficiencies and supply chain optimization, which have actually helped lower costs in recent decades for those whose wages and capital have outpaced inflation. For others seeing a decline in their purchasing power, things have been more challenging amid rising auto loan delinquencies. Price-conscious buyers have also been turning to the used-vehicle market, or cheaper new cars like basic trim sedans and smaller crossovers, instead of EVs, premium cars and performance vehicles. Consumer Credit Cracks? Auto Loan Woes Signal A Bifurcated Economy
So where is $50,000? “Today’s new-vehicle 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. Tariffs have introduced new cost pressure to the business, but the pricing story in September was mostly driven by the healthy mix of EVs and higher-end vehicles pushing the new-vehicle ATP into uncharted territory,” said Erin Keating, Executive Analyst at Cox Automotive. “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.” CarMax slides after posting results for a ‘challenging’ quarter