2025 Trends: Car Prices Remain Stubbornly High in New Year and Potential Tariffs Could Add Pressure, But Shoppers May Find Silver Lining in New Affordable Inventory, According to Cars.com

Rhea-AI Summary

Cars.com has released its 2025 Automotive Trends report, highlighting both challenges and opportunities in the automotive market. The average new-vehicle price has stabilized at $49,000, down from its peak of $50,300 in June 2023. While affordability remains a key concern, there's positive news as inventory of new vehicles under $30,000 increased by 42% year-over-year.

The used car market faces supply constraints due to reduced sales and leases in recent years. The definition of 'American-made' is evolving, influenced by the Inflation Reduction Act and potential new tariffs. In the EV sector, inventories grew 35% year-over-year, though new EVs remain $13,000 above average new car prices. Used EV prices have declined significantly, making them more accessible, while hybrid vehicles gain popularity as a compromise between traditional and electric vehicles.

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-2.94% News Effect

On the day this news was published, CARS declined 2.94%, reflecting a moderate negative market reaction.

Data tracked by StockTitan Argus on the day of publication.

New year brings tightening used-car supply, a shifting definition of "American-made," and new strategies for electric cars

CHICAGO, Dec. 17, 2024 /PRNewswire/ -- Cars.com Inc. (NYSE: CARS) (d/b/a "Cars Commerce Inc."), an audience-driven technology company powering automotive, today released its 2025 Automotive Trends. The industry is entering the new year with a mix of optimism and challenges as shifts in supply and demand continue to shape automotive retail.

"Affordability is improving, but we're not out of the woods. Two interest rate cuts in late 2024 eased borrowing pressures but the average new car price remains stubbornly high," says David Greene, Cars.com analyst. "Further complicating matters, many consumers are struggling financially. Loan delinquencies are high, while used vehicle values have fallen from record highs in the past two years, making it more difficult for consumers to sell or trade out vehicles. While inflation is cooling, sticker shock and affordability in the auto market remain key challenges for 2025. The good news is that new car inventory priced under $30,000 is increasing, offering some relief for buyers and a bright spot for the year ahead."

2025 Brings Challenges for Used Car Shoppers, Forcing a Potential Shift Towards New Cars
The average new-vehicle price has leveled off at $49,000, slightly below its June 2023 peak of $50,300, a small but encouraging shift since prices began accelerating in spring 2021 from a $37,000 average.¹ A positive shift for 2025 is that the inventory of new vehicles priced under $30,000 increased by 42% year over year in November, delivering some comfort for budget-conscious buyers.¹ Cars.com's new enhanced experience aims to help new-car shoppers easily compare vehicles and buying options to find the best vehicle for their budget.

"In 2025, more car shoppers may turn to new cars as the better option. The late-model used inventory just isn't there, due to fewer sales and leases in the past three years. As a result, the options available will continue to command inflated prices," adds Greene. "For new car shoppers, it will be beneficial as they may get more for their trade-in, which also helps offset the price of a new car."

'American-Made' Is Redefined

The definition of "American-made" is evolving, largely due to the Inflation Reduction Act. Foreign automakers with U.S.-based manufacturing facilities now rival legacy Detroit brands, particularly in states like Alabama, Tennessee and Texas. The potential implementation of tariffs in 2025 could further complicate how "American-made" is defined and achieved in the auto industry. These tariffs are expected to impact vehicle components, potentially raising the cost of manufacturing new cars. Fully assembled imported vehicles, already among the most expensive goods affected by such tariffs, could face even higher costs. Notably, potential tariffs on Mexico and Canada may conflict with the terms of the United States-Mexico-Canada Agreement, thereby adding uncertainty.

The impact of the American-made definition in the electric-vehicle market is similar to the mainstream car market as domestic EV battery production is reshaping the landscape and boosting the presence of hybrids and EVs on Cars.com's American-Made Index.

Tricky Balance Between EV Supply and Consumer Demand Lingers

The EV market continues calibrating to consumer demand, driven by growing inventories and declining used-EV prices. In 2024, used-EV prices dropped more than twice as fast as the broader used-car market, making them more accessible to a wider range of consumers. On the new-car front, EV inventories increased by 35% year over year, although price sensitivity remains a challenge — new EVs are priced $13,000 above the average new car.¹ An overproduction of EVs has left dealer lots with extra inventory to unload, causing automakers like Ford and GM to slow production to find the right mix for shoppers. Hybrids are growing in popularity for those interested in the comfort of a gas-powered vehicle and the savings of an EV.

For more of the latest automotive news, reviews and car-buying advice and tips, visit Cars.com/News.

¹ Cars.com internal data

ABOUT CARS.COM^®

Cars.com is the No. 1 most recognized automotive marketplace visited by nearly 30 million in-market consumers each month. Launched in 1998 and headquartered in Chicago, Cars.com empowers shoppers with the data, resources and digital tools needed to make informed buying decisions and seamlessly connect with automotive retailers. Cars.com is the flagship offering from Cars.com Inc. d/b/a Cars Commerce Inc., an audience-driven technology company empowering automotive that simplifies everything about buying and selling cars. Learn more at www.carscommerce.inc.

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SOURCE Cars.com Inc.

FAQ

What is the average new car price in 2025 according to Cars.com (CARS)?

According to Cars.com's 2025 Automotive Trends report, the average new-vehicle price has stabilized at $49,000, slightly below the June 2023 peak of $50,300.

How much has the inventory of affordable new vehicles increased on Cars.com (CARS)?

The inventory of new vehicles priced under $30,000 increased by 42% year over year in November 2024.

What is happening with EV inventory and pricing on Cars.com (CARS) in 2025?

EV inventories increased by 35% year over year, with new EVs priced $13,000 above the average new car. Used EV prices have dropped more significantly than the broader used-car market.

How are potential tariffs affecting the 'American-made' definition for vehicles on Cars.com (CARS)?

Potential tariffs in 2025 could complicate the definition of 'American-made' by affecting vehicle components and manufacturing costs, particularly for imports from Mexico and Canada under the USMCA agreement.

Why might shoppers prefer new cars over used cars in 2025 according to Cars.com (CARS)?

Shoppers may prefer new cars due to late-model used inventory and inflated used car prices, plus the potential for better trade-in values when purchasing new vehicles.