Former Waymo CEO John Krafcik discusses the evolution of self-driving technology and the company’s safety improvements in ‘The Claman Countdown.’
Americans are getting more and more priced out of the new car market as prices continue to rise.
The average price of a new car in April 2025 was $48,422, slightly higher than the average for the previous 12 months, according to data from Edmunds, published in June 2025. However, there is a big difference in prices when compared to used cars.
Average new car sales were 29% higher and 35% higher for three-year-old used cars in April 2025 than in April 2020, according to Edmunds sales data.
NISSAN RECALLS OVER 26,000 VEHICLES DUE TO DOORS THAT CAN INCREASE CRASH RISK
However, dealers seem to be offering some discounts to try and get new cars in more places.
The Manufacturer’s Suggested Retail Price, often referred to in the industry as MSRP, is estimated at $50,408 in April 2025. The difference between the average transaction price and the suggested retail price proves that there was some discounting going on, according to Ivan Drury, Edmunds Director of Insights.
The average transaction price of new cars was 29% higher and 35% higher compared to 3-year-old used cars in April 2025 than in April 2020. (Stock)
Auto expert and analyst Brian Moody told FOX Business that new car prices are undoubtedly driving buyers toward used cars or forcing them to hold on to their current car.
NISSAN ISSUES MAJOR RECALL AS FAULTY PART THREATS ENGINE FAILURE
That change is also reflected in who is still buying new cars. About 19.2% of new car buyers now choose luxury models, according to iSeeCars — up from about 11% to 12% before the pandemic, based on Cox Automotive data.
About 19.2% of new car buyers now choose luxury models, according to iSeeCars. (Andrej Ivanov/Bloomberg via Getty Images)
One of the reasons new cars are so expensive is government compliance, fuel economy, safety features and smart technology, all of which add to the complexity and cost of building a new car, Moody said. The costs, according to Moody’s, are driving up prices for other brands that source parts from overseas or build their cars overseas.
SMALL BUSINESS ADMINISTRATION FOR THE NEW RETURN SYSTEM STATE LAWS
However, Moody’s believes there is a “technological plateau happening with new cars,” which can reduce the incentive to buy new over a slightly used car.
“If you can drive yourself like Super Cruise and Blue Cruise and every car has Apple CarPlay and backup cameras and forward collision detection and lane departure prevention – then what? A 4-year-old minivan might have the same technology as a brand new car,” he said.
Used cars for sale at Colma, California dealership. (David Paul Morris/Bloomberg via Getty Images)
GET FOX BUSINESS ON THE GO BY CLICKING HERE
Because of this, many car manufacturers may have to find another way to lower prices because the car will not have something luxurious to offer in the next few years when the technology is almost the same, according to Moody, who noted that many executives have agreed that they need to find a way to lower the prices of their cars.
