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New vehicle prices are up 32% — nearly $12,000 — over the past seven years, according to data from Edmunds and Kelley Blue Book.

In 2019, one out of every five new vehicles sold for $25,000 or less, according to Edmunds. By 2025, that was down to one in 20.

Budget segments weren't spared. The share of compact cars selling for $25,000 or less fell from 85% in 2019 to 37% in 2025. Large SUVs above $60,000 went from 59% of sales to 95% over the same stretch, making affordable SUVs nearly extinct.

The average new car now lists for $51,595, according to Kelley Blue Book — a price point that's pushed car ownership from a middle-class milestone into a luxury purchase.

It isn't just inflation. The auto industry is increasingly catering to car buyers with higher incomes and who demand premium features as part of a standard package.

"[Automakers] are building to consumer expectations and competitive realities," wrote Erin Keating, Cox Automotive's executive analyst. (Cox Automotive owns Kelley Blue Book.) "Safety, technology, and convenience features have become part of the baseline product. That added capability carries real value, and real cost."

Cars are a big expense, but these shifts have turned what was once a financial flex into a financial stretch for many families. It's become harder to drive a new car off the lot for less than $25,000, with the average price roughly double that.

According to a February report by the National Consumers League, the average car price has risen by more than $23,000 since 2002. Here's how much each factor contributed to that increase:

•   Production costs and automaker margins (34%): Inflation and tariffs make the business of making cars more expensive, but automakers are keeping more of it. In 2019, automakers' annual margins were just under 5%, but they quickly rose after 2020 to more than 8% over the next three years.

•   Trimflation (25%): Automakers have reduced entry-level trims — the optional features, styles and accessories you can add to a car's base model — in favor of more profitable, expensive trims. Features like massaging seats, adaptive cruise control, and automated parking are typically premium add-ons.

•   Vehicle mix (17%): Car buyers are increasingly opting for larger, more expensive SUVs and trucks over more affordable cars — something that automakers are also capitalizing on by slowing production of smaller, less-profitable vehicles.

•   Equipment upgrades (13%): Car makers are adding advanced technology and features once reserved for luxury vehicles in new models, including driver assistance systems and touchscreen displays.

•   Dealer markups (8%): You're not the only one paying higher prices: Automakers are charging dealerships more for every car, too. Dealerships have also been pushing pricey add-ons like extended warranties and VIN etching that drive costs up further.

•   Safety standards (3%): New federally-mandated vehicle upgrades like four-wheel antilock brakes, rear-visibility cameras, and side curtain airbags are responsible for a relatively small jump in prices over the years.

So what?

Budget cars may become a thing of the past. When the price difference is small between a base model car and a better-equipped one, many buyers can't resist the one with more features or long-term value, said Cox Automotive's Keating.

Even so, you still have options to find savings on your next car:

•   Look for basic models: Base model cars still start at (relatively) low price points, like the Nissan Sentra (MSRP $23,845) and the Chevrolet Trax (MSRP $23,495). If you're considering an electric vehicle, new startup Slate is betting that you'll pay for a bare-bones truck (MSRP $24,950) over its much higher-priced competitors.

•   Save before you buy: If you don't currently have a car payment, save up like you do. Putting money away in advance of a purchase lets you earn interest on your savings, rather than paying interest to a lender. Even if you can't pay for a car outright, it'll shrink the amount you need to borrow.

•   Weigh the cost of longer car loans: Buyers are stretching the length of their loans past 6-7 years at record levels, according to Edmunds. That can help spread out the high cost, but it ramps up your overall financing costs and increases the odds of carrying debt during financial emergencies like a layoff. It also increases the chance that you could end up owing more than the vehicle is worth.

•   Consider a U.S.-built car: Under a tax provision made in the 2025 One Big Beautiful Bill Act (OBBBA), you may be able to deduct interest you pay on an auto loan from your taxes — but there's a limit of $10,000, and the car has to meet certain specifications, including undergoing final assembly in the United States. Other guardrails to keep in mind: The deduction only applies to brand-new vehicles (not used or leased ones), and the benefit begins phasing out for individuals earning over $100,000, or $200,000 for married couples.

Related Reading

How to Negotiate Car Prices (Edmunds)

When Will New Car Prices Drop? (Kelley Blue Book)

Can You Afford a $770 Car Payment? Here's How to Tell (SoFi)

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