New car prices rise four months in a row to near-record high

The average price of a new vehicle hit $49,740 last month—just $218 shy of the all-time high from December 2022. 

Why the climb? End-of-year holidays tend to bring out the big spenders. 

• Luxury models and high-end vehicles stole the spotlight, with cars priced above $80,000 making up a record-breaking 5.6% of all sales, according to Kelley Blue Book. 

• Full-size pickup trucks weren’t far behind, posting their highest sales volume of the year, with buyers shelling out an average of $64,261 per truck.

Cause and effect: Higher prices meant steeper monthly payments. The average payment rose to $756—the highest in six months. Buyers now need 38.2 weeks of median income to afford a new vehicle, up slightly from November’s 37.8 weeks. It’s not ideal, but it’s still better than the 40.6 weeks required at this time last year, when affordability hit rock bottom.

The bright side: Dealers have been saying for over a year that high interest rates are killing deals, but there’s some relief in sight. 

• The average auto loan rate dropped to 9.8% in December—the lowest in 18 months—and analysts expect rates to fall another percentage point by spring. 

Pair that with increasing incentives, and affordability is starting to improve year-over-year.

• Discounts averaged 8% of transaction prices—or about $3,958 per vehicle.

• Electric vehicles saw even bigger breaks, with incentives topping $6,700, helping EV sales hit a record 1.3 million units for the year. 

• Despite these discounts, EV prices remain steep, averaging $55,544 last month—a slight increase from 2023.

Worth noting: Not all automakers shared the same story. Mitsubishi had the biggest price drop, with transaction prices down 12% year-over-year. Jeep and Ram also lowered prices to clear out bloated inventories. Meanwhile, Cadillac and Tesla moved in the opposite direction—Cadillac prices jumped nearly 13%, and Tesla’s rose 10.5%, driven by demand for their higher-end models.

Big picture: Yes, cars are expensive. In fact, suggested prices have climbed nearly 25% in the past five years. But with loan rates falling and incentives trending up, 2025 is shaping up to be a little easier on buyers. But for now, December proved one thing—when consumers feel confident, they’re willing to spend—even if it means stretching their budgets a little further.

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