With U.S. car prices continuing to climb, the average cost of a new vehicle has officially crossed the $50,000 mark – a milestone analysts say was inevitable, according to Yahoo Finance.
According to Kelley Blue Book (KBB), the average transaction price reached a record $50,080 in September, up 2.1% from August and 3.6% year over year—the largest annual increase in more than two years.
“We’ve been expecting to break through the $50,000 barrier. 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,” said Erin Keating, executive analyst at Cox Automotive, which owns KBB.
Keating noted that wealthier households are driving demand for new cars, supported by access to capital and better loan terms. Meanwhile, lower-income buyers have shifted to the used market as cheaper new models disappear. The $20,000 market for cars is “extinct,” she said.
Yahoo writes that recent CPI data backs this up: new vehicle prices rose 0.3% in August and 0.7% year over year, while used vehicles climbed 1% and 6%, respectively. The September CPI report has been delayed by the government shutdown.
KBB said tariffs have created “new cost pressure” across the industry, with many trade deals unfinished and a 25% rate still applied to vehicles imported from Mexico and Canada.
A surge in electric vehicle sales also pushed prices higher. The expiration of the federal EV tax credit on Sept. 30 prompted a wave of last-minute purchases, lifting September’s numbers. KBB estimated EVs made up 11.6% of sales, with an average transaction price topping $58,000.
Incentives also played a growing role in September’s record prices, Zero Hedge noticed while digging deeper into the KBB report, with average discounts rising to 7.4% of the average transaction price, or about $3,700 — the highest level so far in 2025. A wave of new 2026 model-year vehicles and a richer mix of luxury and EV models helped push transaction prices higher, with more than 60 models now averaging above $75,000.
Electric vehicle sales surged nearly 30% year over year in the third quarter, reaching a record 437,000 units, as buyers rushed to lock in incentives before they expired. KBB estimated the average EV price at $58,124 in September, up 3.5% from August, while Tesla’s average slipped to $54,138, down 6.8% year over year amid lower-priced Model 3 and Model Y trims.
Looking ahead, KBB doesn’t expect relief. The average new MSRP hit $52,183 in September, up 4.2% year over year. “It is important to remember that the new-vehicle market is inflationary. Prices go up over time, and today’s market is certainly reminding us of that,” Keating said.
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