Quick Facts About New Car Prices
- Car prices are climbing, but not by much.
- Cox Automotive’s Erin Keating says ”the big squeeze” is coming.
- Prices remain about $10,000 higher than five years ago.
- Shoppers could find great deals on overstocked cars from brands like Jaguar, Audi, Dodge, Mazda, and Ram, but not necessarily on understocked Toyota, Lexus, and Honda vehicles.
If you’re in the market for a new vehicle, car prices are not dropping. The good news: They’re not climbing much either, even with new tariffs in play. Car industry experts expected a surge in prices due to lower inventory, fewer incentives, and added tariffs. So far, that spike hasn’t happened, making it a great time to shop for a new car, especially as 2026 models roll in.
According to experts at Kelley Blue Book parent company Cox Automotive, carmakers haven’t significantly raised the manufacturer’s suggested retail prices (MSRPs), car buying demand remains lukewarm, and government policies are still evolving. So, while the market is uncertain, you’re not facing a major vehicle price hike — at least for now.
Read on for expert insights into what’s driving the current pricing pressure and what you need to know if you’re planning to start your search or buy a car now.
- New Car Prices Increase Modestly
- New Car Inventory Update
- Market Uncertainty: Car Shoppers Cautious
- Shop Around for the Best Offer on Your Trade-in
- The Higher Costs of Car Insurance
- What to Expect: Looking Ahead
New Car Prices Increase Modestly
Even as the sales pace began slowing, Kelley Blue Book data show average transaction prices were $48,907 in June, or up $200 from the month earlier. They rose 1.2% from a year ago. Incentives to attract shoppers to new vehicles were up slightly to 6.9%, or nearly $3,400 on average. That’s down from 8% earlier this year, but they remain higher than last year.
Electric vehicle affordability improved in June. Consumers paid an average transaction price of an estimated $56,910. The nation’s largest electric vehicle (EV) seller, Tesla, saw average transaction prices drop 5.7% year over year to $54,989, but were about the same as last month.
Overall, average transaction prices are about $10,000 higher than in June 2020, as the COVID-19 pandemic gripped the nation. At that time, the average transaction price for new vehicles was $38,851.
‘The Big Squeeze’ Is Coming
“The months ahead are shaping up to be ‘the big squeeze,’ as the real headline this summer will be the growing disconnect between rising costs for automakers and dealers and relatively flat consumer prices,” said Cox Automotive Executive Analyst Erin Keating. “As average MSRPs continue to climb, the modest increase in transaction prices suggests the businesses are absorbing more of the burden and not passing the added costs to consumers — something that will impact profitability if the trend persists.”
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 $64,500.
What Drives New Car Prices
- Inventory availability
- Manufacturer incentives
- Dealer discounts
- Trade-in vehicle value
New Car Inventory Update
According to Cox Automotive’s vAuto Live Market View, new car inventory increased nearly 15% in June as 2026 vehicles began arriving at dealerships. That comes after some automakers delayed deliveries or halted production in spring as they grappled with new tariff policies.
Still, sales have not kept pace. Dealerships track the amount of new vehicles they have on hand to sell using a metric 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.
Initially, tariffs triggered a consumer rush to buy cars in March and early April, fearing prices would go up. That initially depleted some inventory. But sales slowed down, and car dealerships started July with a larger 82-day supply compared with June. Still, that’s slightly less inventory, at 1.4%, compared with a year ago.
If you’re out shopping right now, you’ll likely find plenty of vehicles from Jaguar, Audi, Dodge, Mazda, Ram, and Hyundai, though you’re less likely to find the exact model you may want from Toyota, Lexus, Honda, and BMW. Those carmakers have fewer cars in stock at dealerships overall.
Market Uncertainty: Car Shoppers Cautious
Amid the tariffs on imported cars, the new-car landscape has dramatically shifted from buyer frenzy in early spring to caution in the months that followed.
In the past several months, we’ve seen 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. Additionally, 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 Mustang Mach-E, Bronco Sport, and its least expensive pickup, the Maverick.
Meanwhile, carmakers appear to be holding the line on increasing prices, at least for now.
RELATED: Number of Cars Shipped to U.S. Drops
Shoppers heading out to purchase a new vehicle should closely monitor dealership pricing. While automakers set the stage for pricing, dealers ultimately close deals. They could easily add markups or higher dealer fees to compensate for any losses they could incur due to tariffs along the way.
Cox Automotive data suggest the top five 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, we suggest new car buyers search for incentives and cash-back deals and expand their shopping boundaries 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, including some left over from 2024.
Credit-worthy buyers can secure deals on last year’s EV models, like a 2024 Honda Prologue with 0% APR financing for up to 72 months, good through Sept. 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 could sometimes 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 when shopping around for a vehicle.
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 7% higher in May than a year earlier. Bankrate says car insurance averages about $2,680 a year for full coverage. Full coverage, called comprehensive car insurance, covers natural disasters like wildfires, hurricanes, floods, 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. It’s hard to know what to expect beyond the summer, except for a chaotic car-buying future. 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 Federal Reserve meeting in June, the nation’s central bank held rates steady.
Charlie Chesbrough, a Cox Automotive senior economist, recently said, “Much of the pull-ahead demand that fired up sales in April and May has now been satiated, so consumer demand is expected to be weaker in the coming months. Buyers are price-sensitive right now. As more tariffed products replace existing inventory over the summer, prices are expected to trend higher, leading to slower sales in the coming months.”
According to the Dealertrack Credit Availability Index, consumers needing financing can find easier access to credit. That’s a great sign because it means carmakers’ captive financing arms are more willing to lend money, including to consumers with bad credit scores.
RELATED: Bad Credit Car Loans: Everything You Need To Know
What to Do If You Need a Car Now
If shopping now, look for overstocked 2025 models that car dealerships want to sell quickly to make room for the incoming 2026 vehicles. Manufacturers appear to be holding the line on sharply increasing prices due to tariffs, and that’s great news if you’re in the market to buy a new car right now. Before buying:
- Research your options and expand your boundaries if needed.
- Look for deals, especially on 2025 models as 2026 vehicles start pouring in.
- 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.
