Data from Kelley Blue Book puts the average cost of a new car at $48,008 as of March 2023. That’s 1.1% lower than the average price in February, which was $48,558. However, there was a 3.8% increase in transaction prices in the last 12 months.
According to Kelley Blue Book, 17 of the 23 vehicle categories showed a pricing increase from March 2022 to March 2023. However, three showed double-digit increases — these were as follows:
Vans: 20.3% ($48,287 to $58,078)
Luxury Full-Size SUVs and Crossovers: 16.3% ($106,838 to $124,250)
Entry-Level Luxury Cars: 11% ($99,958 to $110,983)
From 2018 to 2022, the average cost of a brand-new car has continuously increased year over year. There has been a slight decrease in 2023, but these figures are only as of the year’s first quarter.
Besides the transaction price, other factors may affect a vehicle’s final sale price. These include the manufacturer’s suggested retail price (or sticker price), dealer fees and add-on features. Even your location and supply chain disruptions may impact how much you spend on a new car.
KEY TAKEAWAYS ON THE AVERAGE COST OF A NEW CAR
Whether you’re a car enthusiast, a financial planner or simply interested in current market trends, knowing the average cost of a new car can be helpful.
As of March 2023, the average price of a new car is $48,008, according to Kelley Blue Book.
Although the current average transaction price decreased by 3% from December 2022 to March 2023, it’s still 27.8% higher than pre-pandemic prices.
Prices of several vehicle categories increased from 2018, but those with the most significant jumps were vans (50%), luxury crossovers and SUVs (32%) and non-luxury sedans (30%).
Microchip shortages and delays in manufacturing because of COVID-19 affected the average price of new cars.
The average price of new cars has steadily increased in the last five years. In 2018 and 2019, the average new car cost less than $40,000 ($37,577 and $38,948, respectively).
COVID-19 affected the economy in many ways, and new car prices were one of them. It caused supply chain disruptions, which led to higher prices. From an average of $41,152 in 2020, numbers jumped over 14% to $47,077 in 2021. Fortunately, manufacturers have devised strategies to deal with ongoing supply chain disruptions caused by an inability to procure materials and microchips. Although 2022 prices increased by 5.2% to $49,507, the first quarter of 2023 saw a 3% drop to $48,008.
The vehicle segments with the most significant increases in price from 2018 were vans (50%), luxury SUVs and crossovers (32%), non-luxury sedans (30%), pickups (27%) and luxury sedans (26%).
A sedan has two rows of seats and four doors, with separate compartments for cargo, its engine and passengers. A Toyota Corolla or Camry falls under this category, as well as a Honda Accord or Civic.
As of 2023, purchasing a brand-new sedan can set you back $31,758 — around 30% more than the average price during 2018 ($24,395). However, depending on its size and model, you may spend more or less than that. The average cost for each group size is as follows:
Subcompact Sedans: $23,715
Compact Sedans: $26,379
Midsize Sedans: $31,760
Full-Size Sedans: $45,179
Regardless of size, the trend of these prices since 2018 is the same — mostly upward. The sole exception is the full-size sedan. Its average price in 2022 was over $48,000 and decreased to around $45,000 in 2023.
An SUV combines a larger interior with off-road capabilities and a pickup’s towing ability. It uses a ladder or truck frame, while a crossover (which some also refer to as an SUV) uses a unibody chassis.
These have become more popular recently, making up around 40% of the market in 2020 and 45% the following year. Well-known vehicles in this category include the Honda CRV, Jeep Grand Cherokee, Toyota RAV4 and Ford Explorer.
In 2023, the average price of a new SUV or crossover varies between sizes:
The average rate for most sizes shows an upward trend since 2018, but the subcompact’s price decreased slightly between 2022 and 2023. Overall, average rates have increased by around 21%, from $38,783 in 2018 to $47,061 in 2023. The jumps from 2019 to 2020 and 2020 to 2021 were the highest, exceeding 6% each year.
Another vehicle type steadily gaining popularity is the pickup truck, such as the Toyota Tacoma, Toyota Tundra, Chevrolet Silverado and Ford F-150. Instead of rear passenger seats, these vehicles have an open cargo bed. In 2021, its market share in the automotive industry increased to 16%.
Pickups come in two basic sizes. The average cost of a new midsize pickup is $41,176 in 2023, lower than its $41,311 average price in 2021. A full-size pickup costs $62,825, slightly lower than 2022’s $64,207 average.
In 2018, a brand-new pickup truck cost an average of $40,958. As of March 2023, its price has increased by 27% to $52,001. The most significant rise was from 2020 to 2021, from $45,234 to $50,667 — a 12% increase.
Although electric vehicles only accounted for 4.6% of total car sales in 2021, that’s considerably higher than its 0.2% market share in 2011. These figures include full-electric vehicles and hybrid cars (those with an internal combustion engine and an electric motor, each having a separate battery).
As of March 2023, the average cost of a hybrid car is $36,340, while an electric one (which runs on an electric motor and a battery alone) costs $58,940. While the average price of hybrid cars went from $27,595 in 2018 to $36,340 in 2023, rates for electric vehicles have decreased significantly from $67,004 in 2018 to $58,940 six years later.
Prominent examples of electric and hybrid cars include the Toyota Prius, Tesla Model 3 and Ford F-150 Lightning. The Biden-Harris administration wants electronic vehicles to comprise at least half of 2030 new-car sales. As a result, manufacturers are investing more in these vehicle types.
A van is a medium-sized vehicle with one row of seats in front. The rest of its space includes either open cargo space or another row or two of seating. It’s the vehicle type with the most significant increase in average cost over the last five years — 50%. Compared to an average of $34,991 in 2018, a brand-new van in 2023 costs $52,540.
During the last six years, the highest jumps happened from 2019 to 2020 and 2020 to 2021. Both had double-digit increases of 18.2% and 11.1%, respectively.
Unsurprisingly, the average prices for both full-size vans and minivans have increased since 2018. In 2023, the former costs $58,078 on average, while the latter is around $47,001.
Vans, such as the Honda Odyssey and Toyota Sienna, require more materials to build due to their size and are often customizable. Vans are popular with families and businesses alike, contributing to their high price points.
The Lexus LS series, BMW 7 series and Mercedes Benz S-class are all examples of luxury vehicles. They vary from mainstream models because they offer unique features, whether it’s higher-quality interior materials, sound insulation or components made of carbon fiber.
On average, a brand-new luxury car costs $83,356, slightly lower than its 2022 rate ($84,120). However, that’s still 26% higher than the 2018 average of $65,995. Figures can vary depending on the model type you purchase:
While entry-level and mid-range models both dipped slightly in price compared to 2022 figures, high-end models increased in value this year.
The sedan isn’t the only vehicle category with luxury counterparts — SUVs and crossovers have them as well. The BMW X series, Range Rover and Acura MDX are prime examples. These have been gaining popularity, too — Kelley Blue Book found that almost 18% of new car sales in September 2022 were luxury vehicles.
The average price of a brand-new SUV (or crossover) in 2023 is $70,170 — 32% higher than the 2018 average of $53,160. However, although prices have continued increasing since then, the rate of increase has slowed. The highest jump was from 2018 to 2019 at 9.6%. The change has become progressively smaller since, with the 2023 average only 0.7% higher than the rate in 2022.
Luxury SUVs offer more room and often include better suspension designs. Their interiors use higher-quality materials and can come with unique features, driving up their costs.
Average Price of New High-Performance and Sports Cars
The Ford Mustang, Toyota Supra, Honda Civic Type R and Chevrolet Camaro are some examples of high-performance or sports cars. These are more visually appealing and have more powerful engines.
The average cost of vehicles in this category was $85,022 in 2023 — a 14% increase from its average price in 2018 ($74,389). The most significant change in rate occurred between 2021 and 2022, when the average price increased by 7.3%, from $76,042 to $81,576. A brand-new sports car costs $45,793 in 2023, while a high-performance vehicle averages $124,250.
The average cost of a new car from American brands in 2023 is $57,062. Although that’s not quite as high as European brands, it’s almost 33% higher than Asian vehicles.
Cadillac and Lincoln, both luxury brands, are the most expensive, each with an average price exceeding $70,000. GMC and Ram trucks average above $60,000. Tesla, best known for its electric cars, is in a similar price range.
Ford, Lincoln’s parent brand, is more affordable since it doesn’t focus on luxury vehicles. Buick has the lowest average price among included brands at under $40,000.
Compared to American and European brands, Asian-made vehicles are more affordable, with an average price of $43,025. Genesis and Infiniti top the list as the most expensive brands, each averaging over $60,000. Lexus, Toyota’s luxury brand, lands third at just under $58,000.
Toyota, Lexus’ non-luxury counterpart, has an average cost of under $41,000, making it more affordable. The company offers a broad range of models, including hybrids, full-size SUVs and trucks. It’s followed closely by another well-known Asian brand, Honda, at $37,349.
Kia, Mazda and Mitsubishi have the lowest rates in 2023. All of them average under $35,000.
While American and Asian brands have an average price of under $60,000, the average cost of new cars from European brands is higher — $65,986.
Many consumers associate European brands with luxury vehicles. That said, Volkswagen produces more mainstream cars and has an average price of $38,415. However, the Volkswagen Group does own several luxury brands, including Porsche, which has the highest average at $112,332.
Other well-known European brands are Mercedes Benz and BMW, which have reputations for producing luxury vehicles. Of the two, Mercedes costs more. A new Mercedes costs an average of $79,702, while a new BMV averages $70,513.
While knowing the average price of a new car is essential when you’re exploring options, several other factors come into play that may affect the final transaction price. These include the sticker price (or the manufacturer’s suggested retail price), whether you’re trading in a used vehicle, availability, add-ons, dealer fees and sales tax.
Manufacturer’s Suggested Retail Price (MSRP)
As its name suggests, the MSRP is the recommended sale price of a vehicle. It’s often used interchangeably with the term sticker price. Federal law requires dealers to display the MSRP on a window sticker with other information, such as model year, trim level, destination fee (if any) and additional charges.
Dealers set pricing independently and don’t need to sell the vehicle for the MSRP. The final price might be lower (if they want to push sales) or higher (if there’s significant demand). Knowing a vehicle’s MSRP allows you to gauge its value and determine if you’re getting a good deal.
Dealer fees are simply that — additional charges from the dealer. The amount covers some services (like processing documents or registering your vehicle) or compensates for some of their expenses (like advertisements). These usually equate to up to 10% of the car’s price. While some dealer fees are standard, others are negotiable. Some of the most common dealer fees when purchasing a new vehicle include:
Destination FeesDestination fees cover the delivery costs when the manufacturer brings the vehicle to the dealership (or other sale locations). According to J.D. Power, it usually ranges between $1,000 and $1,500 but may be higher for luxury or high-performance vehicles.
Documentation FeesThese fees cover the time and effort dealers spend processing documents related to your purchase. Depending on your location, you may pay less than $100 or over $500. Dealer documentation fees tend to be higher in Alabama, Georgia, Colorado and North Carolina. Meanwhile, California, Louisiana, New York, Oregon and Arkansas have the lowest such fees.
Title and Registration FeesStates require vehicle owners to register their cars. Fortunately, when you purchase a brand-new vehicle from dealers, they’ll do this for you. The exact cost varies between locations and models. Besides the actual registration amount, some dealers charge an additional cost for their services.
Inspection and Emission FeesSome states also require your vehicle to pass an inspection or emissions test, and some won’t allow you to complete the registration process without it. Dealers may facilitate this for you for a fee, which varies per state. For example, a new car inspection in the District of Columbia costs $10, while you pay $7 in Texas.
The economic concept of supply and demand also applies to your car’s final sale price. In recent years, the pandemic caused microchip shortages and created supply chain disruptions, decreasing the supply of new vehicles. It led to increased average prices for new cars.
However, when the supply exceeds the market demand, purchase power transfers to the consumers. It usually forces dealers to lower prices to move inventory.
Trade-In Vehicle Value
Trading in your vehicle can help reduce a new car’s sale price — more so if they need that particular model in stock. They’re more likely to offer you a good deal on cars they know they can flip quickly.
Optional Features and Packages
You can always add features that don’t necessarily come with the car when it leaves the factory. Common add-ons are anti-theft systems, window tinting, splash guards, better speakers or 360-degree cameras. Your dealer will likely be willing to include these, but they’ll increase your final sale price.
Most states require you to pay sales tax when purchasing a new car. If you buy it out of state, you pay a use tax (which is essentially the same thing). Rates vary between states and cities. For example, Texans pay a 6.5% sales tax, while vehicle owners from California pay anywhere between 7.25% to over 10%. Meanwhile, some states — Alaska, Delaware, Montana, New Hampshire and Oregon — have no sales tax.
Cost of Car Insurance
Knowing the average cost of a new car in 2023 helps you prepare for this significant expense. In addition, don’t forget about auto insurance. Except for New Hampshire, all states require car insurance. No matter where you live, having coverage provides financial protection while on the road. The total cost of your vehicle can contribute to your insurance costs and should be a factor when budgeting for your auto purchase.
Average Price of a New Car FAQ
Refer to these frequently asked questions to gain more information about the average cost of new cars in 2023.COLLAPSE ALL
What’s the average price of a regular car?
On average, a non-luxury sedan costs $31,758. However, that figure varies depending on your vehicle’s size and model. For example, subcompact sedans are cheaper than the average, costing roughly $23,715. However, a full-size unit averages $45,179.
How much does an SUV cost?
A new SUV costs an average of $47,061 in 2023. Note that these pertain to non-luxury models. Luxury SUVs and crossovers average $70,170.
Is owning a car expensive?
For many people, purchasing a car is a major expense. Remember, after purchasing it, there are other costs to consider, including repairs, maintenance and insurance.
Can I negotiate car dealer fees?
Although some dealer fees are mandatory (such as destination fees), others are negotiable. You might not be able to avoid them all, but asking your dealer if you can reduce them may help you reach a more affordable sale price.
Which brands are the most expensive?
New European cars cost more than American or Asian brands, with an average price of $65,986. American cars cost roughly $57,062, while Asian cars cost around $43,025. The most expensive brands overall are Porsche ($112,332) and Land Rover ($109,384), both European.
Expert Insights on the Cost of New Cars
Editor In Chief of Car Coach ReportsBACK TO ALL EXPERTS
What role did the pandemic play in causing car prices to go up so much in a span of 4-5 years?
The microchip shortage over the past few years has slowed the production of new vehicles, funneling buyers instead to pre-owned cars, trucks and SUVs. Prices have risen significantly as a result. There is still a shortage of new cars and parts.
In what situations is it better to finance or pay cash for a new car?
I would not suggest long-term loans, but a cash buy cuts the dealer’s profits. They prefer leases and loans. If leasing is your choice, lease the car for three years maximum and plan to drive between 10K and 15K miles to get your best value.
About Angelique Cruz
Angelique Cruz has been researching personal finance for three years, with expertise in macroeconomics, financial statistics and behavioral finance. After a decade-long stint as a management consultant creating professional and personal development programs, she now specializes in writing informative content around personal, auto, and home loans. Angelique has a degree in psychology from the Ateneo de Manila University.
Owning a vehicle entails a lot of responsibility. These online resources can provide you with more information about purchasing cars, getting coverage and other related subjects.
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