Buying a new car has never been more expensive.
The average sticker price was just over $48,000 in February, according to Kelley Blue Book. With President Donald Trump's tariffs, that price is expected to rise by thousands more.
"Yes, cars are more expensive than they were a generation ago, but we didn't have things like a square inside the dash that can tell you where you are and where to go at any given moment," said Brian Moody, executive editor of Kelley Blue Book.
Moody says the rise in prices is due to an increase in demand, high-tech features, and government regulations. Backup cameras, for example, are required by law and force companies to maneuver into cars with added weight and precision.
To put this increase into perspective, the average price of a new car in the U.S. over the last 13 years has risen by 60%. The median household income in the U.S. has risen 22.5% over that same time period — from $65,740 to $80,610. It means purchasing a new car is eating up a larger percentage of the average family's income, a trend that could only get bigger because of tariffs.
"What an automaker or producer of good will do is they'll look at their entire product line and they're going to say which parts of our product line can support a price increase and which parts can't. And they'll spread that price out across their whole product line so that it doesn't seem like such a shock to consumers," Moody said.
Starting Wednesday, Ferrari announced it would increase the price of all its vehicles imported to the U.S. by up to 10% due to the president's tariffs. While not many people are in the market for a luxury sports car of that caliber, it's indicative of how automakers could handle the trade war—from Ferrari to Ford.
"Automakers are going to have to adjust their pricing. The ones that are made in the U.S. with very low or moderate tariffs—they're going to have to be the ones that pay for the ones that have high tariffs," Moody said.
So, what should shoppers do? Moody suggests keeping your existing car for longer, looking at used cars from a reliable brand or even considering a used electric vehicle from around 2015. He says you can get a first-generation EV for around $10,000 as a way to save on costs.
