Car Prices Are Starting To Tick Up, And They Could Get Worse

One of the ongoing concerns regarding the Trump administration’s import tariffs has been the likelihood of increasing car prices. While prices haven’t skyrocketed yet, Cox Automotive and Kelley Blue Book have data showing that’s changing. Not only that, but the number of vehicles in inventory is diminishing. With fewer cars to pick from, dealers may start raising prices, and new inventory will likely be more expensive due to tariffs. Either way, the new car market is getting pricier, and unless things change, it could get worse.

Details On Current Pricing And Inventory

According to Kelley Blue Book, part of Cox Automotive, the average transaction price for new cars is $48,699 as of April. This is up 2.5% over March, and it’s 1.1% higher compared with April of last year. While it hasn’t reached a new peak, it has been increasing of the last few months compared with the end of 2024. Cox also reports that list prices are up, too. This might not be the end price that buyers pay, but it marks a starting point. The average list price is $48,656, so it’s very nearly the same as the average transaction price, and it has climbed 1.6% over last month. Average monthly payments are also up by 3% and now sit at $753, though Kelley Blue Book notes that monthly payments were still higher in December.

While prices are creeping up, inventory is down much more significantly. Between the start of April and the start of May, the average inventory is down by 7.4%, and it’s down by 10.5% compared to last year. Automakers have an average supply that will last 66 days, down from 72 at the beginning of the month and 82 last year. Inventories naturally vary depending on the automaker. Lexus and Toyota have the smallest available inventory at 25 and 29 days respectively, less than a month for either brand. Honda, Subaru, BMW, Porsche, and Kia have between 45 and 59 days. At the other end of the spectrum, Land Rover, Infiniti, Mitsubishi, and Ram all have more than 100 days of inventory.

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Prices Could Go Up

With the institution of import tariffs, one of the strategies automakers have been relying on to avoid price hikes has been existing inventory. As an example, Infiniti paused importation of its Mexican-built QX50 and QX55 SUVs to the US. It didn’t end sales, though, and it highlighted the fact that it still had “ample inventory” of vehicles that had already crossed the border and were not subject to tariffs. Indeed, that seems to be the case as Infiniti is one of the brands with more than 100 days of inventory in the country.

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Automakers with much tighter inventories won’t have that luxury, and they will face tariffs on freshly imported models. For example, Subaru, which has one of the tighter inventories, has announced that it’s increasing prices. Increases will range between $750 for Impreza and Crosstrek, up to $2,000 for the Japanese-built BRZ and WRX. Now car companies could try to wait a little longer to continue importing, but if demand stays steady and supply gets tight, prices could end up climbing anyway. It’s possible that tariffs could be lowered, like those for British car manufacturers, but even those tariffs are still higher than they were a year before. So it seems to us that prices are likely to go up no matter what, but by how much is almost anyone’s guess.

Source: Cox Automotive, Kelley Blue Book