Why Cars Are Expensive and What You Can Do About It
On February 25, 2026 By newsroom Topic: Automotive
1. Rising Prices: The New Norm
- Average Cost: New cars now average over $48,000—an increase of nearly $6,000 from two years ago and $10,000 since 2020.
- Contributing Factors:
- Inflation and disruptions from the COVID-19 pandemic.
- Shift towards higher-priced SUVs and trucks.
- Reduced production of lower-priced models due to chip shortages and new regulations.
2. The Changing Showroom
- Fewer Affordable Cars:
- Automakers have phased out smaller, affordable models (e.g., Ford Fiesta, Chevrolet Spark) in favor of SUVs and EVs, which have higher profit margins.
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Example: Ford now offers SUVs like the Bronco (starting at $32,295) instead of sedans like the Fusion (which started at $22,840).
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Electric Vehicles (EVs):
- EV prices are dropping ($53,376 on average in August 2023, down from $65,688 a year earlier) but remain higher than gas-powered alternatives, pushing up the overall average car price.
3. Value in Today’s Cars
- Modern Advancements:
- Cars are now safer, more efficient, and packed with features, including standard safety systems and advanced infotainment.
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Fuel Economy: Improved by 30% over two decades, saving consumers $7,000 per vehicle in lifetime fuel costs.
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Affordable Options:
- Models like the Toyota Corolla (starting around $21,500) and the Toyota Camry (starting at $26,000) remain excellent values, offering reliability and efficiency without breaking the bank.
- Corolla Hybrid delivers 48 mpg overall, making it a cost-effective and practical choice.
4. Tips for New-Car Shoppers
- Do Your Research:
- Use online resources to find reliable, affordable options.
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Don’t base your budget on market averages—focus on what fits your financial needs.
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Be Flexible:
- Consider alternatives to in-demand models to avoid paying premiums.
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Look for discounts and incentives, which vary greatly by brand and model.
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Trade-In Advantage:
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Elevated used-car prices can result in higher trade-in values, helping offset new-car costs.
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Leverage Buying Tools:
- Use services like Experts' Build & Buy program to secure a fair deal.
5. The Future of Car Shopping
- More Electric Options: Prices for EVs are expected to drop further as production scales up.
- Broader Affordability: Despite rising costs, good value exists in mainstream small and midsize cars.
- Patience Pays Off: Allow more time to find the right vehicle at the right price.
Bottom Line: While car prices are higher than ever, smart shopping, research, and leveraging trade-in values can help you navigate the market and find a car that meets your needs without overspending.
