How much does a car cost?

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Both new and used vehicles have increased in price since 2015, though consumers are only willing to spend less than half of the purchase price for these vehicles. During the COVID-19 pandemic, global supply chain shortages were rampant, and automakers took advantage of the scarcity by producing expensive vehicles to maximize profits.

Now that inventory is returning to normal, automakers have surpluses of vehicles and projections indicate lower purchase points and higher buyer incentives and trade-in values. However, since cheap, used cars are in high demand, consumers may have difficulty scooping them up before they leave the dealer’s lot.


Key insights

The average cost of a new vehicle is $48,759, and the average cost of a used car is $26,446.

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At most, consumers are willing to spend an average of $21,310 on a new or used car.

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The full-size SUV is the most expensive new vehicle body type, at an average of $72,405. The midsize sedan is the least costly, at an average of $32,595.

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Trade-in values are impacted by depreciation, brand reputation, wear and tear and other factors. New car owners can expect up to 60% depreciation over five years.

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Following the COVID-19 pandemic, trends project that car buyers will purchase more used vehicles, and sellers will be hard-pressed to provide incentives to empty their car lots.

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Average price by vehicle type

Midsize sedans have the lowest average cost of the vehicle types below, at an average of just under $33,000. In contrast, the average full-size SUV can reach prices of over $70,000.

Tesla’s late-year price cuts pushed the sale of electric vehicles (EVs) through the end of 2023. This move was significant in the electric car industry, especially since Tesla is the leading producer of EVs in the U.S., and had a substantial impact on the market; 2023 saw a record number of EV buyers, at nearly 1.2 million in the U.S.

Other EV brands are becoming increasingly competitive with more buyer-friendly prices; currently, the 2023 Chevy Bolt has an MSRP of $26,500, and the 2024 Nissan Leaf has a $28,140 MSRP.

Average retail car price by state

While the manufacturer sets the MSRP of a vehicle, registration and documentation fees vary widely by state; some states administer flat fees, and others charge by vehicle type, weight, miles per gallon and other factors. Title fees are usually a one-time expense and are more consistent across states.

Florida, Virginia, Colorado and North Carolina have the highest average documentation fees, while Wisconsin, Illinois and Oregon have the highest title fees for new vehicle purchases. Nevada, Kansas, Illinois and California have the highest sales tax rates on their vehicles.

» LEARN MORE: How to buy a new car

Conversely, New Mexico, Arizona, North Dakota and Hawaii have the least expensive title fees, and  Oregon, Montana, Alaska, New Hampshire and Delaware have no sales tax. California, Minnesota and Arkansas have the least expensive documentation fees.

Average used car price by state

The average used car price by state was just over $33,500 at the end of 2022. Eight of the 10 cheapest states for used vehicle purchase are in the northeast, with Vermont boasting the least expensive used cars at $31,445.

The most expensive used cars are found in the midwestern region of the U.S.; buyers in Wyoming will spend the most money on used cars, at an average of $41,405.

Other car ownership costs, like insurance and car maintenance, vary by state, so consumers should research insurance costs and warranties before making their purchase.

» LEARN MORE: How to buy a used car

Vehicle price trend projections

As the market effects from the pandemic quell, car production around the world is expected to exceed sales by over 6%, creating a surplus of new vehicles. Sellers will likely need to offer discounts to get the new cars off their lots. As seller inventories inflate, it is expected that dealers to offer incentives, rebates and other discounts to get customers to purchase new vehicles.

Car production around the world is expected to exceed sales by over 6%, creating a surplus of millions of vehicles, the price of which will most likely need to be discounted to get the vehicles off of the lot. Additionally, experts predict that automakers will begin to manufacture more small, low-end car models that are more affordable for consumers.

There is much uncertainty about the future of oil, which impacts car prices, particularly what type of cars consumers demand. Per Reuters, oil prices are also projected to rise in 2024, as the Organization of Petroleum Exporting Countries (OPEC) agreed to cut 2.2 million barrels of crude oil output per day throughout the beginning of this year. This could decrease consumer demand for large “gas-guzzlers” and increase demand for vehicles with higher fuel economy.

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FAQ

How much does a car cost?

The average cost of a new vehicle is $48,759, and the average cost of a used vehicle is $26,446.

What is the MSRP of a vehicle?

MSRP stands for “manufacturer's suggested retail price.” A car’s total “sticker price” includes the MSRP plus any applicable taxes and fees.

What factors impact the price of used vehicles?

The vehicle’s physical condition and its internals, mileage, the demand for the brand or style of car, and even your ability to negotiate can impact the depreciation value, which will influence how much a dealer will pay for your trade-in.

What is the difference between trade-in value and resale value?

Trade-in value is the amount that a dealer will deduct from your new car purchase based on the value of your used car. The resale value estimates a car’s market value, or how much it will sell for.

How can I get the best value for my trade-in?

When going to trade in your vehicle, be sure to do your research on pricing so you can negotiate a fair value for it. Additionally, the experts at Kelley Blue Book recommend detailing your vehicle, making cosmetic repairs and addressing any engine issues as well.


Article sources

ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:

  1. NADA, “2023 NADA Mid-Year Data Report." Accessed Jan. 16, 2024.
  2. World Population Review, “Car Registration Fees by State.” Accessed Jan. 16, 2024.
  3. CNBC, “Will 2024 be a good time to buy a car? Here’s what to expect, auto experts say.” Accessed Jan. 16, 2024.
  4. Cox Automotive, “Automotive Market Shifts to Favor Buyers as U.S. New-Vehicle Prices Down Record 2.4% Year Over Year in December 2023.” Accessed Jan. 19, 2024.
  5. Cox Automotive, “Data Tables for December 2023 Kelley Blue Book Average Transaction Prices Report.” Accessed Jan. 19, 2024.
  6. Cox Automotive, “A Record 1.2 Million EVs Were Sold in the U.S. in 2023, According to Estimates from Kelley Blue Book.” Accessed Jan. 19, 2024.
  7. CarFax, “Chevrolet Bolt EV vs Nissan LEAF - Car Comparison.” Accessed Jan. 19, 2024.
  8. Kelley Blue Book, “Average Used Vehicle Price Falls.” Accessed Jan. 19, 2024.
  9. NASDAQ, “PERSONAL FINANCE GOBankingRates-Logo Will Car Prices Drop in 2024? Here’s What an Auto Expert Predicts.” Accessed Jan. 19, 2024.
  10. Reuters, “Slow demand set to keep oil price near $80/b in 2024, Reuters poll shows.” Accessed Jan. 19, 2024.
  11. CarFax, “Used Car Price Trends In January 2024.” Accessed Jan. 19, 2024.
  12. CarEdge, “Car Dealer Doc Fee by State in 2024.” Accessed Jan. 19, 2024.
  13. Progressive, “What is MSRP on a car?” Accessed Jan. 19, 2024.
  14. Kelley Blue Book, “Car Trade-in Tips: How Can I Maximize My Car’s Value?” Accessed Jan. 19, 2024.
  15. Kelley Blue Book, “Average Used Car Price Now Over $28,000.” Accessed Jan. 19, 2024.
  16. Kelley Blue Book, “How To Beat Car Depreciation.” Accessed Jan. 19, 2024.
  17. Kelley Blue Book, “2023 Best Resale Value Awards: Top Cars, Trucks, and SUVs.” Accessed Jan. 19, 2024.
  18. iSeeCars, “This Is the Average Price of a Used Car in Each State.” Accessed Jan. 19, 2024.
  19. Kelley Blue Book, “What is Resale Value?” Accessed Jan. 19, 2024.
  20. Cox Automotive, “Used-Vehicle Supply Closed 2023 at the Highest Levels of the Year.” Accessed Jan. 29, 2024.
  21. Tax Foundation, “State and Local Sales Tax Rates, Midyear 2023.” Accessed Jan. 30, 2024.
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