The average price of a new car reached $49,353 in February, marking a 3.4% increase compared with the same period last year, according to a recent report by Kelley Blue Book. The average manufacturer’s suggested retail price (MSRP) for new vehicles stood at $51,440 in February.
For many buyers, the rising cost of vehicles is compounded by concerns about affordability. The average price of a used car, which is often considered a more accessible option, was $26,043 in December, Kelley Blue Book data shows.
“If the average wage isn’t going up and the average car price has gone up, that makes it harder for young people to keep up with what’s going on,” said Blair Turner, highlighting the challenges faced by first-time car buyers.
Economists point to several factors driving the upward trend in vehicle prices. David Gantz, the Will Clayton Fellow in Trade and International Economics at Rice University’s Baker Institute for Public Policy, noted that government policies and higher interest rates play a predictable role in cost increases.
“Rising costs for parts and raw materials due to new tariffs over the past year, combined with higher prices for natural gas and electricity—both heavily used in auto manufacturing—have contributed to the increase, sometimes substantially,” Gantz explained.
Looking ahead, experts do not anticipate a decline in car prices in the near term. “I don’t see prices coming down. I think they will continue to go up,” Gantz said.
As new and used vehicle costs rise, affordability remains a growing concern for many consumers navigating a shifting automotive market.
