With car prices chugging higher in the US, it was only a matter of time before window stickers crossed the $50,000 mark.
According to Kelley Blue Book (KBB), the average transaction price of a new vehicle in the US topped $50,000 for the first time, reaching a record high of $50,080. KBB, which is part of Cox Automotive, said prices were up a hefty 2.1% sequentially from August and up 3.6% year over year. The 3.6% jump in September was the largest gain in over 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,” Cox Automotive executive analyst Erin Keating said in the report.
Keating said wealthier households drive the current auto market for new cars because those buyers have access to capital, along with attractive loan rates that prop up the higher end of the market.
Meanwhile, the $20,000 market for cars is “extinct,” Keating said, with lower-income and price-conscious buyers perusing the used market.
The most recent CPI data from August confirms what KBB observed in September. The Bureau of Labor Statistics reported that new vehicle prices rose 0.3% in August and were up 0.7% year over year. Even the used vehicle market saw prices inflate, up 1% in the month and 6% year over year.
Due to the government shutdown, the September CPI report has been delayed.
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One big factor boosting prices has been tariffs, KBB said, which have, not surprisingly, introduced “new cost pressure” to the business.
While a number of tariff deals have been struck, the overall rates are now higher, and frameworks for deals in some countries are still not finalized. Most important for US buyers, negotiations between the US, Mexico, and Canada are still in limbo. Current tariff rates for exported vehicles built in Mexico and Canada — the vast majority of which are destined for the US — still stand at 25%.
In addition, a mix of pricier EVs and higher-end vehicles pushed new car average transaction prices higher. The expiration of the federal EV tax credit on Sept. 30 pulled forward a higher amount of EVs that would otherwise have been sold, which caused prices to jump.
KBB estimates the US EV market share hitting 11.6% in September, a record high, with the EV average transaction price crossing $58,000.
Looking ahead,KBB projects the situation won’t get any better next year.
KBB reports the average new MSRP — which differs from average transaction price because it includes incentives — reached a new record high in September of $52,183, a 4.2% year-over-year jump and above the long-term average.
