Car sales rose in 2025, despite rising prices

More than 16 million new cars were sold in 2025, according to data published this week. That’s up about 2% for the year, despite the fact that it’s gotten increasingly expensive to buy a car.

The average monthly payment on a new car is now nearly $790 a month, according to data from Cox Automotive — up from about $600 a month just before the pandemic. 

Erin Keating, executive analyst at Cox Automotive, said news of impending tariffs early in the year caused lots of people to run out and buy cars to get ahead of potential price increases.

“The big trends in 2025 were that there were no trends that were regular,” she said. “We saw a lot of upheaval throughout the year.”

Then “things calmed down,” Keating said. There was the news in midsummer that federal tax credits for buying an electric car would go away in September.

“That also pushed people and automakers to really get EVs sold before that deadline expired, which really left us with a unique fourth quarter where we saw sales drop,” she said.

But Kristin Dziczek, a policy advisor at the Federal Reserve Bank of Chicago, said for all the fear that car prices were about to spike, that did not happen.

“What turned out is that there wasn’t a lot of price inflation due to the tariffs, and so people in between were still able to access vehicles at somewhat normal prices,” she said.

Those “somewhat normal” prices were still much higher than before the pandemic.

In 2020, the average cost of a new car was just under $40,000. Now, Garrett Nelson, senior vice president of equity research at CFRA, said it’s hit $50,000.

“That is really a price point that is unaffordable for a large segment of the population,” he said.

New cars have long been something that higher-income households are more likely to buy. But that has become increasingly true in the last few years.

“I think the trends are consistent with what we’ve seen across the consumer space, where essentially higher-income consumers are doing very well and really helping support sales growth, and you’re seeing a real lag with lower-income consumers,” Nelson said.

It’s not the just the price of cars. The cost of insurance and car loans have risen, too.

Stephanie Brinley, associate director of auto intelligence at S&P Global Mobility, said interest rates on car loans could come down a bit this year since the Federal Reserve has been cutting rates.

“It’s just a matter of when and how low they come down and how fast they come down,” she said. “I think that could be a relief for consumers.”

But this is also likely to be the year that car makers do raise prices because of tariffs, she said — so that relief might not go far.