Americans paid near-record prices for new cars in December, as a combination of seasonal demand and higher sticker prices pushed the average transaction within shouting distance of $50,000.
New car prices have climbed for four consecutive months, according to Kelley Blue Book (KBB) data. In December, the average price of a new vehicle was $49,740, the second-highest level ever recorded and just shy of the December 2022 record ($49,958). Vehicle prices increased 1.5% from the previous month alone.
Part of this is a function of automakers launching new, higher-priced 2025 model-year cars. As they unveiled new features and technology, many also increased manufacturer’s suggested retail prices, or MSRPs, on their most popular models. For example, the new 2025 Ford F-150 pickup truck starts at $38,710, up from $36,570 on the 2024 model. (KBB calculates average transaction costs to reflect what buyers really pay, which can be less than the “sticker” price of a vehicle, according to a spokesperson from KBB parent company Cox Automotive.)
A seasonal demand bump also factors into the spike in prices. High-end cars, in particular, tend to sell well around the winter holidays. Their loftier prices contribute to an increase in the overall average. This season in particular, shoppers snapped up luxury cars, according to KBB. “Sales of vehicles priced above $80,000 boomed in December, up 37% over a year ago,” it noted in a report.
Several brands stood out with large transaction price increases. According to KBB, Cadillac transaction prices soared 13% in the past year, Tesla prices jumped 10.5% and Infiniti prices rose 8.1%.
Average new car prices near $50,000
Higher prices mean higher monthly payments for buyers. Most buyers are now signing up for payments over $600. In a separate report released this week, Cars.com finds that over 60% of new-car buyers now have monthly payments over $600, while 35% are over the $800 mark.
In 2019, sub-$600 car payments were the norm. Since then, however, car prices have surged 29%, and auto loan rates are much higher due to the Federal Reserve’s interest rate hikes to combat inflation.
“Financing costs are still a major barrier for many buyers despite some recent help from the Federal Reserve with a percentage point of rate cuts,” Cars.com said in a report.
Looking to save? The good news is, there are still deals out there. For one thing, discounts are going to be available on most 2024 models right now — if you can find one, that is.
In December, KBB data shows that Volkswagen, Ram and Nissan had the highest incentives among major automakers. All three manufacturers had incentives amounting to more than 13% of MSRPs across their lineups, compared to an average of 8% across all automakers. (At current prices, 8% is roughly $3,958.)
Another place to look for deals: Most Stellantis models (Chrysler, Dodge, Jeep and Ram) are available at higher inventory levels than a year ago. This means dealers are eager to unload them. Prices on vehicles from all four nameplates have dropped, KBB finds.
