Art is an award-winning reporter who covers advanced industry and technology on the Deseret News' special projects team.
Kelley Blue Book reports U.S. car buyers in September paid an average $50,080 for their vehicles, a new record and the first time the figure has ever topped the $50,000 mark.
Kelley analysts said new vehicle prices have been rising steadily for the past year and a trio of factors are helping drive the escalations: tariffs, electric vehicles and luxury vehicles.
President Donald Trump declared a new 25% tariff on vehicles manufactured outside the U.S. that went into effect in April and followed up a month later with a 25% trade fee on imported vehicle parts.
Kelley estimates the combined levies add as much as $6,000 to a vehicle priced under $40,000. Automakers held off on price increases for months after the tariffs started, with some losing money to sell more cars while they waited to see if trade negotiations would bring the levies down. Now that the White House has reached long-term trade deals locking tariffs in place, many automakers say they can’t hold off raising prices any longer, according to Kelley’s report.
Electric vehicle sales surged in the third quarter of the year as U.S. buyers hurried to claim a $7,500 federal EV tax credit before it expired Sept. 30. EV prices run higher than prices for gasoline-powered cars, a factor that helped push up the average new car cost last month. The average EV sold for $58,124 in September, per Kelley.
Finally, Kelley notes Americans simply chose to buy more expensive cars in September and sales of luxury vehicles surged. Fully 7.4% of vehicles sold in the U.S. last month had a manufacturer’s suggested retail price of over $75,000, up from 6% a year ago.
“Today’s auto market is being driven by wealthier households who have access to capital, good loan rates, and are propping up the higher end of the market,” Erin Keating, executive analyst with Kelley Blue Book parent company Cox Automotive, said in the report. “While there are many affordable options out there, many price-conscious buyers are choosing to stay on the sidelines or cruising in the used-vehicle market.”
An August report from Edmunds notes that figuring out how much to spend on a car is a moving target even among financial experts. And complicating the affordability question are the harsh, follow-on economics of buying a new vehicle, which in most cases will lose 30% of its value in the first two years followed by 8% to 12% reductions in each of the following years.
If you’re still OK with that unfortunate math, Edmunds has a few pointers for calculating how, or if, a new vehicle purchase fits into your household budget.
General guidance suggests automotive expenses, including gas, insurance, car payments and maintenance, should not exceed 20% of your pretax monthly income. Some experts posit that a vehicle that costs less than half of your annual take-home pay may be affordable. Still others, taking a more frugal stance, say you should spend no more than 10% to 15% of your annual income on a vehicle purchase.
Edmunds correspondent Brett Evans suggests an approach that seeks middle ground in the new vehicle affordability equation.
“Our short answer is that your new car payment should be no more than 15% of your monthly take-home pay, meaning what you keep after taxes and insurance,” Evans wrote. “If you’re leasing or buying used, that payment should be no more than 10%. The reason for finding a vehicle that falls below 10% to 15% is that the payment isn’t the totality of what you will be spending.”
And those additional expenses, which include fuel costs, insurance and, in the case of used cars, maintenance, tend to be overlooked. Evans ballparks those costs at another 7% of your take-home pay. So, all in, you’re looking at a total budget that is no more than 20% of your monthly take-home pay in an ideal circumstance.
Adding to the challenge for those considering a new (or used) vehicle purchase are the rising costs of financing.
According to a recent report from Cox Automotive, auto loan rates, like the average cost of new vehicles, were on the rise last month.
Cox reports the average interest rate on a new vehicle loan rate moved up 34 basis points in September to 9.43%. The average rate for a used vehicle loan in September bumped up 22 basis points to 14.15%.

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