2025 Auto Trends: Prices High, Affordable Cars Rising

Cars.com has released its 2025 Automotive Trends report, revealing a mix of opportunities and challenges for car buyers in the new year. While affordability shows signs of improvement, persistent issues like high new-car prices, consumer financial struggles and looming tariffs continue to shape the automotive landscape.

High prices persist despite interest rate relief

David Greene, Analyst at Cars.com, stated: "Affordability is improving, but we're not out of the woods." 

Two interest rate cuts in late 2024 provided some relief, but the average new-car price remains stubbornly high at US$49,000. Although the figure is slightly below the US$50,300 peak in mid-2023, it's still a steep climb from the US$37,000 average in early 2021.

Compounding the issue, high loan delinquencies and falling used-vehicle values have made it harder for consumers to trade or sell vehicles. 

"While inflation is cooling, sticker shock and affordability in the auto market remain key challenges for 2025," David noted.

A bright spot for budget-conscious buyers

There is hope for budget-conscious shoppers, as new-car inventory priced under US$30,000 rose by 42% year over year in November 2024. Cars.com's newly enhanced platform aims to simplify the process for shoppers, enabling easy comparisons of vehicles and financing options.

"In 2025, more car shoppers may turn to new cars as the better option," David added. Prices have inflated with limited, late-model used cars available due to reduced sales and leases in recent years. The shift may benefit new-car buyers who could get higher trade-in values to offset their purchases.

Redefining 'American-Made'

The concept of "American-made" vehicles is undergoing significant changes, influenced by the Inflation Reduction Act and growing domestic EV battery production.

Foreign automakers with US-based facilities are increasingly challenging traditional Detroit brands in states like Alabama, Tennessee and Texas.

Potential tariffs in 2025 could further complicate this evolving definition. Vehicle components and fully assembled imported cars may face increased costs, potentially impacting manufacturing prices.

Additionally, tariffs on Mexico and Canada could conflict with the United States-Mexico-Canada Agreement, adding further uncertainty to the market.

As domestic EV battery production reshapes the auto industry, it impacts EVs similarly. Cars.com's American-Made Index reflects this shift, highlighting the growing presence of hybrids and EVs in the "American-made" category.

The EV market adjusts to changing demand

The EV market continues to balance supply and demand, with declining prices for used EVs driving increased accessibility. In 2024, used EV prices fell more than twice as fast as the broader used-car market, making them an attractive option for cost-conscious buyers.

For new EVs, inventories increased by 35% year over year, though price sensitivity remains an issue, with new EVs priced US$13,000 above the average new car. Overproduction has left automakers like Ford and GM adjusting production levels to better match demand.

Meanwhile, hybrids are gaining popularity, appealing to buyers seeking the reliability of gas-powered vehicles combined with the savings of an EV.

While 2025 presents hurdles for car buyers, the automotive industry shows signs of resilience. Expanded inventory, increasing affordability in certain segments and evolving definitions like "American-made" will signal opportunities for shoppers to navigate the year's challenges.

"New-car inventory growth and enhanced tools for shoppers will help us turn a corner," David said. Cars.com remains committed to empowering consumers with insights and resources to make informed decisions in a shifting market.

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