2025 Trends: Car Prices Remain Stubbornly High in New Year and Potential Tariffs Could Add Pressure, But Shoppers May Find Silver Lining in New Affordable Inventory, According to Cars.com

Core Insights - The automotive industry is facing a mix of optimism and challenges as it enters 2025, with supply and demand dynamics continuing to shape retail [1] - Affordability is improving but remains a significant challenge, with high average new car prices and financial struggles among consumers [2] - The definition of "American-made" is evolving, influenced by the Inflation Reduction Act and potential tariffs, impacting both traditional and electric vehicle markets [3][4] Automotive Market Trends - The average new vehicle price has stabilized at $49,000, down from a peak of$50,300 in June 2023, while new vehicle inventory priced under $30,000 has increased by 42% year over year [2] - There is a potential shift towards new cars as late-model used inventory is limited, leading to inflated prices for used vehicles [3] - The electric vehicle (EV) market is adjusting to consumer demand, with used EV prices dropping significantly and new EV inventories increasing by 35% year over year [5] Economic Factors - Loan delinquencies are high, and while inflation is cooling, affordability remains a key challenge in the auto market for 2025 [2] - The potential implementation of tariffs in 2025 could complicate the definition of "American-made" and raise manufacturing costs for new cars [3] Electric Vehicle Landscape - Domestic EV battery production is reshaping the market, increasing the presence of hybrids and EVs on Cars.com's American-Made Index [4] - The overproduction of EVs has led to excess inventory, prompting automakers to slow production to better align with consumer demand [5]