The average new-car price in September 2024 declined 0.4% from September 2023, according to Kelley Blue Book (KBB).1 That’s in part due to carmakers offering higher incentives valued at an average of $3,522 — a three-year high. What’s more, good-credit borrowers may qualify for 0% financing on many new models, so it’s a relatively good time to buy a new vehicle.
Although vehicle price inflation appears to have stalled, average transaction prices are still $11,000 higher than five years ago.2 Learn what you might pay for popular new and used vehicles, which cars are the cheapest to buy and insure, and how to compare car insurance quotes, so you can decide whether buying a car fits your budget.
One reason for the year-over-year decrease in car prices is that buyers are opting for less-expensive vehicles, like subcompact and compact SUVs. But manufacturer incentives — which rose to an average of 7.3% of the vehicle price in September — are also playing a role, KBB reports.
Keep in mind that the $48,397 figure is just an average of new car transaction prices. You might pay more for a large truck, electric vehicle, or luxury car, while a new compact sedan may be more affordable. Some brands are also more likely to offer generous incentives than others due to high inventory.
New-vehicle prices vary depending on the type of car you choose. For example, larger cars cost more because they require more materials, luxury cars include premium features that are expensive to design and build, and high-performance and electric vehicles require more spending on research and development. EV prices are also higher due to battery costs.
Here’s what you might pay for a new car based on the vehicle type you choose, according to data from Cox Automotive.
SUVs are very popular, accounting for more than half of car sales in advanced economies in 2023.3 In September, full-size SUVs and crossovers sold for an average price of $75,861 — about 57% more than the average vehicle. Meanwhile, midsize SUVs went for $48,012, on average, and subcompact SUVs sold for a relatively affordable average price of $29,772, according to Cox Automotive data.
Some of the top-selling cars in 2024 are pickup trucks, including the Ford F-Series and the Chevrolet Silverado.4 Full-size pickup trucks sold for an average transaction price of $65,911 in September, while small and midsize pickup trucks sold for an average of $43,570 — beating the industry average transaction price by nearly $5,000.
As buyers react to price increases by choosing more affordable cars, sales of compact and subcompact vehicles are increasing, now accounting for nearly 34% of all vehicles sold. The average transaction price for compact cars in September was $27,462, while the average price of subcompact cars was just $21,544 — less than half the industry-average transaction price.
The luxury car market has grown in recent years and is expected to continue growing. The average luxury car sold for $52,018 in September, while high-end luxury cars sold for an average of $117,557 — nearly two and a half times the industry average.
Currently, the vehicle brands with the highest average transaction prices include:
Porsche: The average vehicle transaction price for Porsche cars was a whopping $125,894 in September. Porsche is known for high-quality engineering and outfits its cars with luxury features, making them more expensive. Porsche also sells some models in limited quantities.
Land Rover: Buyers paid an average transaction price of $103,265 for a Land Rover in September. Land Rovers, which are status-symbol cars built with high-quality materials that deliver off-road capabilities, fetch a high price due to high demand and limited production numbers for some models.
Mercedes-Benz: Luxury Mercedes-Benz vehicles sold for an average price of $72,345 in September. These cars are expensive because the manufacturer uses high-quality materials to build cars that include innovative technology and deliver outstanding performance. The brand is also synonymous with prestige.
BMW: Like Mercedes-Benz, BMW is a reputable brand that produces cars with a high-quality build and a high-performance driving experience. As a result, BMW cars sold for an average transaction price of $72,122 in September.
Cadillac: Cadillac cars, which sold for an average price of $71,567 in September, are built with high-end parts and innovative technology like other luxury cars. That makes them expensive to purchase, although they’re less expensive to maintain than other luxury vehicles.
On the other end of the spectrum, some automakers produce cars at lower prices than the industry average. The table below shows the cheapest car brands and their average purchase price. Some of these cars offer great value, even if they’re missing the high-end features of a Rolls Royce, for example.
The current average price of a used vehicle is $27,501, down 5.3% year over year, according to the CarGurus used car price index. But prices vary widely depending on the make of the vehicle, ranging from an average of $6,354 for a used Saturn to $221,978 for a used Lamborghini. The model year and mileage of a used vehicle also affects depreciation and the resulting price.
Brands that ceased production long ago have the lowest average transaction price — for example, Saturns were only produced until 2010. On the other hand, high-performance vehicles or sports cars from luxury brands produced in limited quantities, like Lamborghinis and Ferraris, sell for the highest average prices.
Used-car prices also vary by body style. The table below shows the cheapest options for car buyers seeking a used car.
Five years ago, prior to the COVID-19 pandemic, average transaction prices for new cars were only $37,590. Since then, average vehicle prices have risen nearly $11,000, about 29%.
The pandemic disrupted supply chains and led to a shortage of semiconductors, slowing down auto production. Meanwhile, stimulus checks and a fear of public transportation heightened the demand for cars, according to the Federal Reserve Bank of St. Louis.5 Years of severe shortages have had a lasting effect on vehicle availability and prices.
That imbalance between supply and demand caused prices to rise and also had a ripple effect on the used-car market. People who sought private transportation found that dealer lots lacked inventory and instead turned to used-car marketplaces, driving used-vehicle prices through the roof.
Meanwhile, car manufacturers prioritized luxury vehicle sales to earn better profits as the semiconductor shortage persisted, making it difficult to find affordable new vehicles. And the rapid increase in the federal funds rate affected auto loan rates, adding more pain for borrowers.
The good news is that new-vehicle inventory is finally stabilizing, and some carmakers are even oversupplied. As a result, price increases are leveling off, dealership incentives are increasing, and financing deals are becoming more widely available. This means the U.S. has entered a buyer’s market for new-vehicle sales, according to analysts.
The price of a new car depends on many factors, including:
Keep in mind that other factors beyond the MSRP affect the cost of car ownership, including title and document fees, taxes, registration costs, maintenance costs, the rate and term of your auto loan, and the cost of a full-coverage car insurance policy and other add-on coverages. Be sure to calculate the money you’ll spend each month before making a decision.
Cars with top safety features and low repair costs tend to be cheaper to insure. These are some of the cheapest cars to buy and insure with full coverage, based on Insurify premium data and average transaction price data from Kelley Blue Book:
Subaru Impreza
Volkswagen Jetta
Honda Civic
Ford Escape
Chevrolet Colorado
A vehicle is a significant investment, whether you buy new or used. It’s important to understand how much vehicles cost to purchase, operate and insure. Here are answers to some common questions to help you.
The average price of a new car in September 2024 was $48,397, according to Kelley Blue Book. Meanwhile, the average price of a used vehicle dropped more than 5% since 2023, landing at $27,501, according to the CarGurus used car price index.
Although car prices remain high, they’ve leveled off in the past year. During the height of pandemic-fueled inventory shortages, some consumers paid more than MSRP for a new vehicle. But today, it’s possible to find discounts, incentives, and even 0% financing for buyers who qualify.
Experts suggest spending between $10,000 and $25,000 on your first vehicle, but your individual financial situation will determine what you can afford.
The cheapest Tesla you can buy is the Model 3, which starts at $42,490, according to the Tesla website.
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