New vs. Used-Car Value Statistics

New Car Values

As of January 2023, the average new car transaction is worth 6 percent more year over year and 30 percent more than in January 2020, right before national stay-at-home orders commenced. Below are some average new car prices, according to Kelley Blue Book and its parent company Cox Automotive.

• New car: $49,388
• Non-luxury vehicle: $45,344
• Electric vehicle: $58,725

Despite the high average price of electric vehicles, EV costs decreased by 5 percent from December 2022 to January 2023 due to price cuts from Tesla.

The Consumer Price Index from the Bureau of Labor Statistics shows that for urban consumers, there was a 3 percent increase in the cost of cars from 2022 to 2023, although the largest increase occurred from 2021 to 2022 — 10 percent year over year. See below for weighted representations of price changes. The higher the number, the more the price changed, on a scale of 140 to 180.¹

Used-Car Values

As of February 2023, average used-car prices are about 30 percent higher than pre-pandemic costs, but experts believe this is the peak and that prices will decline by 10 percent in 2023.²

The highest jump in price was from 2020 to 2021, which saw a 33 percent increase in the average price of used cars. As new car prices go up, more people want to buy used cars, leading to an increased demand and, thus, higher prices for buying the latter.

Why Are Car Prices So High?

There are a few reasons why car prices are so high:

• Inventory shortage: As we explore more below, fewer cars available means higher prices. A lack of semiconductors, issues with supply chains, and a labor shortage in the U.S. contributed to the current new car shortage.
• Lack of incentives for discounts: When manufacturers produce too many cars, they discount vehicle prices. In contrast, when there’s a lack of inventory, manufacturers don’t have much incentive to lower prices or offer discounts. However, as the inventory increases, so do the discounts. For more affordable cars like compact SUVs and cars and subcompact cars, discounts are at 3 to 4 percent, the industry average.
• Low trade-in vehicle values: Many dealers don’t want the types of cars many people are willing to trade in, like gas-guzzling new model trucks and SUVs. This makes trade-in deals worse for customers. Dealers have a ton of expensive used cars and very few that are under $10,000.³

When Will Car Prices Drop?

While used-car prices have already started to decrease, new car prices may stay the same for the foreseeable future, according to Kelley Blue Book.

How many cars are sold in the U.S. per year and how does the number relate to inflation?

Sales Per Year

The number of cars sold decreased by 28 percent from 2019 to 2020, probably due to stay-at-home orders and the number of people working from home. There was also a decline from 2020 to 2021, but only by 7 percent, meaning people started buying cars more often. 2022 data is not yet available, but we expect less of a decline as supply chains begin to return to normal.⁴

Inventory Per Year

Auto inventory hit a 10-year low in November of 2021, with only 72,900 units in the U.S. However, there has been increased inventory since November 2022, a sign that prices may decrease for used cars in particular.⁵

Inflation vs. Car Sales

What’s the relationship between inflation and car sales? For most of the past decade, it’s been an inverse relationship: As inflation increased, the number of cars sold decreased. However, since 2020, both inflation rates and the number of cars sold have increased, which means that more people are buying cars despite rising inflation.⁶

Most of us can’t afford to buy cars out of pocket, which is why many people turn to car loans. The APR, or annual percentage rate, is one of the most important factors when choosing an auto loan for a new car. After reaching a low in 2016, higher interest rates are more commonplace nowadays, with a 26 percent increase from the third to the fourth quarter of 2022.⁶

In November 2022, car loan rates reached a record high of nearly 7 percent.

Insurance providers use a number of factors to determine car insurance rates, and one is the value of the car itself. More expensive cars tend to cost more to insure, as they have higher repair and parts costs. However, insurance providers also consider vehicle safety ratings, i.e., how susceptible the car is to theft, occupant injury, and damages, along with how well it protects drivers and passengers in car crashes.

Whether you’re buying a new car or a used car, it’s important to know what you can expect to pay. But if you want to spend less, you may want to wait until prices are down. In the meantime, use your current car or rely on rideshares or public transit. If you wait, you could save thousands on the sticker price and potentially find lower auto loan rates for new cars.

We analyzed data from the following third parties:

• Bureau of Economic Analysis
• Bureau of Labor Statistics
• Bureau of Transportation Statistics
• Kelley Blue book
• Manheim Consulting