2025 in review: The year in car shopping
In the news, 2025 was one of the most tumultuous years the automotive industry has seen in decades.
Off-again, on-again tariffs upset worldwide trade and set the news media (present company included) buzzing about potential 25% price increases.
Global tensions rocked supply chains, particularly those that feed needed microchips into car factories by the trainload, threatening to shutter auto plants and send prices soaring.
The end of the federal government’s $7,500 electric vehicle tax credit led automakers to cancel and delay plans for a transition to EVs domestically. Meanwhile, the steady electrification of the world outside our borders continued, threatening to split a global industry and leave American automakers desperately behind Chinese juggernauts.
So, when we sat down to run the numbers, we expected to see some drama.
The actual outcome? For all the noise, there’s been only incremental change.
There’s a lesson in the data. The day-to-day specifics of the auto industry drive headlines. But, for everyday Americans, cars are just a necessity and an expense. The fundamentals of car shopping don’t change much, even when politicians and global conflict feed a frenzied news cycle.
A few reassuring figures:
Prices are up, but only 2.8%
In January, the average new car sold for $48,461. That figure was 1.3% higher than a year before.
In October (the most recent month for which we have complete data), the average buyer paid $49,814, or 1.3% higher than a year before. That’s an increase of $1,353 — a significant hit to the average family’s budget, but not the 25% increase tariffs suggested.
From January through October, prices rose just 2.8% — less than the Consumer Price Index for all goods.
Cars got cheaper as a share of income
Prices are higher, but the actual impact of a car on your family budget is down.
Sticker prices are one way to measure the cost of a car. But we prefer another — time. Very few Americans can afford to buy a new car with cash. Most borrow to buy and work to pay off the loan.
The Cox Automotive/Moody’s Analytics Vehicle Affordability Index measures how long the average earner would have to work to pay off the average new car loan.
It started the year at 37.7 weeks. By October, it sat at 36.4. Incredibly, affording a new car is easier now than it was when this chaotic year started.
Dealers still have healthy inventory
Tariffs, supply chain problems and disruptions to the global market in microchips threatened to leave cars in short supply. They never came close.
An old industry rule of thumb tells dealers to keep about 60 days’ supply of new cars in stock, with another 15 days on order or in transit. That 75-day supply is the Goldilocks inventory level, sales veterans say. With that much on hand, they likely have the combination of color and features you want in stock.
Fewer means they might lose your business to a competitor. More costs them money — dealers are often making payments on the cars on their lot through a complex instrument called a floor plan loan. Cars that sit unsold cost them money.
They started the year with too many cars to sell. The average dealer entered January with a 96-day supply.
They will likely end the year with too many cars to sell. The average dealer in October had 88 days’ worth on hand.
The supply situation differs from brand to brand. Toyota and Lexus dealers can’t keep up with demand for their cars. Ford and Ram dealers have too many. But, on average, shoppers currently have some leverage because of oversupply, despite the headlines.
Used car prices stayed remarkably stable
If new car inflation was surprisingly low in 2025, used car inflation was almost nonexistent. In January, the average used car was listed for a sale price of $25,721. In October? $25,945.
The average used car list price increased by just $224.
In part, that’s a function of prices staying high. Automakers built about 8.1 million fewer cars during the peak of the COVID-19 pandemic than they otherwise would have. That’s 8.1 million cars that will never reach the used car market, keeping upward pressure on prices for years.
But, despite the headlines and economic uncertainty, used car prices stayed nearly flat in 2025. So did supply — dealers started the year with a 48-day supply, and as of our last calculation, they’re heading into the holidays with a 48-day supply.
Even the disappearing EV discount didn’t disappear
One of the biggest automotive stories of the year was Congress putting an end to the federal government’s $7,500 EV tax rebate. When the year began, you could effectively knock $7,500 off the price of many EVs thanks to federal largess.
Now that it’s gone, you can still knock $7,500 or more off the price of many EVs. The federal government is no longer chipping in. But many automakers replaced the rebate with their own discount programs.
Automakers offering a $7,500 discount to most buyers right now include BMW and Hyundai (on some models). Dodge is beating the old federal discount, offering $7,750 off its Charger Daytona EV. Kia is going further, with discounts up to $11,000 on many of its electric offerings.
The lesson in the numbers
I’ve covered the auto industry one way or another for most of 25 years and rarely seen headlines as dramatic as those of 2025.
But, if you asked me for car shopping advice in January, I’d have told you to shop for your loan and your car separately, save money by buying the car you need 50 weeks a year and rent for the two weeks you need a third row or towing capacity, and never let yourself feel pressured because it’s not terribly hard to find a good deal right now.
If you asked me about car shopping today, not a word of that advice would change.
Sean Tucker is a Managing Editor for Kelley Blue Book. He’s based in Washington, D.C., where he has covered the auto and energy industries for a quarter-century.
The Steering Column is a weekly consumer auto column from Cox Automotive. Cox Automotive and The Atlanta Journal-Constitution are owned by parent company, Atlanta-based Cox Enterprises.
