Americans are getting more and more expensive new car market as prices remain high.

The average transaction price for a new car in April 2025 was $48,422, slightly higher than the average for the previous 12 months, according to Edmunds data, released in June 2025. However, there is a significant price disparity compared to used cars.

According to Edmunds sales data, the average transaction price for new cars was more than 29% and 35% higher compared to 3-year-old used cars in April 2025 than in April 2020.

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However, dealers seemed to be offering some discounts to try take new cars off the lots.

The manufacturer’s suggested retail price, commonly known as MSRP in the industry, averaged about $50,408 during April 2025. The difference between the average transaction price and the suggested retail price shows that there was some discount, according to Ivan Drury, director of Insights at Edmunds.

The average transaction price for new cars was over 29% and 35% higher compared to 3-year used cars in April 2025 than in April 2020. (iStock)

Automotive expert and analyst Brian Moody told FOX Business that higher new car prices are certainly driving buyers to used cars or even forcing them to keep their current car.

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This change is also reflected in who still buys new cars. Nearly 19.2 percent of new car buyers now choose luxury brands, according to iSeeCars, up from 11 percent to 12 percent before the pandemic, according to data from Cox Automotive.

Nearly 19.2% of new car buyers now choose luxury brands, according to iSeeCars. (Andrej Ivanov/Bloomberg via Getty Images)

One of the reasons new cars are becoming more expensive is because of government compliance, fuel economy, safety equipment and smart technologies, which add to the complexity and cost of building a new car, Moody said. The tariffs, Moody’s said, are also driving up the prices of some models that get parts from overseas or build their cars entirely overseas.

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However, Moody believes that “there is a technological plateau with new cars,” which could reduce the incentive to buy new instead of a slightly used car.

“Once you get it with autonomous driving like Super Cruise and Blue Cruise and all the cars have Apple CarPlay and backup cameras and forward collision detection and lane departure prevention, so what? A 4-year-old minivan is likely to have the same technology as a new car,” he said.

Used vehicles for sale at a dealership in Colma, California. (David Paul Morris/Bloomberg via Getty Images)

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As a result, many automakers may have to find another way to lower prices because the car won’t have anything spectacular to offer in the coming years once the technology is roughly the same, according to Moody, who noted that many executives have already recognized that they need to find a way to lower the price of their cars.