Vehicle prices are going down. In December of 2022, the average transaction price (ATP) of a new vehicle in America was $49,698. That peak followed extremely steep inflation during President Joe Biden's term. 41 months later, and despite inflation being the big headline on the daily fear, uncertainty, and doubt newsfeed cycle, the average cost of a new vehicle is still lower, at $49,220.
Vehicle deflation is real and easily tracked. Cox Automotive publishes the average transaction price each month, and it is public information. One thing we wish to clear up quickly in our story today is that vehicle ATP is not the “price of a new car.” Cars are significantly less expensive than the average for all vehicles because trucks skew the overall average dramatically upward. The May ATP for the segment that includes cars like the Honda Civic and Toyota Corolla was $27,643, and that price has barely budged in the past year. It’s up less than 1% over 12 months.
Since December of 2022, the ATP has jumped around a bit. There are many reasons for this. They include:
1. Seasonality effects. Some dummies buy new cars when they are at their annual peak prices.
2. EV price changes - EVs were crazy money when you could get your neighbor’s taxes to pay for $7,500 of the cost. EV prices are actually down $3,600 because competition and the “free market” have been lowering EV costs every month for the past 11 months.
3. Truck and luxury vehicle mix. When fleets are adding trucks, or the fancy pants crowd is leasing a lot of luxury SUVs, the ATP bumps up a bit. It's super helpful to the scary headline industry when this happens. They can pretend it will impact you.
Here are some fun facts about the average transaction price that the folks who only write negative stories won’t tell you:
-Vehicle prices have dropped $1,100 since last December.
-It costs less to buy a new vehicle this month compared to last.
-The average price of a sports car has fallen by $7,495 over the past year.
-The ATP for a Tesla is lower by 6% since a year ago.
We can keep going. So let's. The biggest news in the average transaction price space is that EVs are dropping in price like hot potatoes. EVs now cost $3,600 less (on average) than in September 2025. You may remember that month as the first after the free money giveaway for EVs ended. And the funny thing is, EV prices were dropping even before the federal tax incentive went bye-bye. Every month for the past 11 months, the ATP for EVs has dropped. That is classic vehicle price deflation in action.
Yes, you can certainly find examples of sticker prices being higher than in the past. But who cares? It’s the after-negotiation price that matters, right? Those headlines about monthly payments going up? Sure, they are true. People and businesses are indeed doing stupid things in the finance office after they decide on the price of a new car. Like extending their payment out to 84 months. That doesn’t mean you will pay more for a new car. Just that for those people, a long lease origination made sense. Maybe they plan to pay off the loan early, but the APR they got was better with a longer term? Or perhaps the cost was lower if they took out a loan they planned to pay off after their first month of ownership, rather than paying cash. The scary headline cabal won’t tell you that.
The truth is, it costs less now to buy the “average” vehicle than it did about four years ago. It costs less this month than last month. And it costs less this month compared to last December. Let us know in the comments below if the story surprised you. We won’t hold our breath. Positive news stories don't get many pageviews.
John Goreham is a 14-year veteran of Torque News. An accomplished writer and a long-time expert in vehicle testing, Goreham also serves as the Vice President of the New England Motor Press Association and has a growing social media presence. He’s also a 10-year staff writer and community moderator for Car Talk. Goreham holds a B.S. in Mechanical Engineering and an undergraduate Certificate in Marketing. In addition to vehicle and tire content, he offers deep dives into market trends and opinion pieces. You can follow John Goreham on X and TikTok, and connect with him on LinkedIn.
Image of Torque News contributor Hande Tuncer doing research at a car dealer by John Goreham. ATP chart courtesy of Cox Automotive.
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