Rising Costs, Shrinking Affordability: The State of the Auto Market in 2025
Key Points
- Market affordability continued to be a concern in 2025, with affordability shrinking for both new and used models.
- Automakers also shifted gears, coming to terms with the reality of electric vehicles and prioritizing hybrids instead.
If you’re in the market for a vehicle, be it new or used, it’s bad out there. The year 2025 will go down as an unprecedented time for the automotive industry; from the number of affordable new cars available shrinking to costs associated with buying a car skyrocketing, it’s a tough time for shoppers. Here are a few things you should be paying attention to as a concerned car buyer as we head into 2026.
Related: 2025 Market Durability Shifts to Cautious Optimism for 2026
One Charge Has Skyrocketed: Destination Fees
- Takeaway: Destination fees jumped more than 200% in 2025.
We’ve touched on the rising costs of destination fees before. If you’re unfamiliar with what a destination charge is, it’s a charge added on top of a vehicle’s MSRP to cover the cost of transporting the vehicle from the factory to the distribution center and then to the dealership. In years past, these costs increased slightly and were mostly not an issue, but recently, they have increased dramatically.
Domestic brands have been increasing destination charges at a pace that outpaces import brands. Cars.com data show the average price increase for destination charges rose 263% in 2025. Since 2022, destination fees for domestic brands have gone up $581 and now average more than $2,000, $600 more than the average of what import brands charge. Automakers’ reasoning for this increase ranges from outside sources, such as tariffs, to simple realities of the market. Whatever the reason, destination charges are one of the fastest-rising costs associated with car buying that more shoppers should pay attention to.
The Used-Car Market Is Shrinking
- Takeaway: Automakers’ continued focus on SUVs is having an indirect effect on the affordable used-car market.
Not everyone wants an SUV; many buyers still want small cars and sedans. Unfortunately for buyers of these vehicles in the U.S., many automakers have left them out in the cold. Brands such as Ford and Chevrolet have almost completely gotten rid of anything that resembles a car (save for the Mustang and Corvette, respectively), while others have just a handful left due to models being discontinued (Kia just discontinued the Soul, and Nissan got rid of the Versa, which was the cheapest new vehicle sold in the U.S.).
These decisions to kill affordable cars have affected the used-car market. Cars.com data show that since 2019, used inventory of cars from mass-market brands has fallen 44%. The used cars that are available on the market are still relatively affordable, though, with our data showing that the average used-car price is just over $26,000, about $3,000 less than the average for the entire used market. However, that average is also up over 42% since 2019.
What’s worse, along with this price increase comes higher-mileage cars: The average used car has 63,378 miles on it, a nearly 10,000-mile increase since 2019.
Automakers Are Prioritizing Higher Trims
- Takeaway: Automakers have been reshuffling the lineups of some of their products, putting more emphasis on fully loaded trims while base and mid-level trims are eliminated.
Another contributor to shrinking affordability in the car market is available trims. Automakers have been updating the lineups of some of their products, getting rid of entry or mid-level trims and focusing on more profitable higher trims. Worse still is that when these lower trims are eliminated, it can raise the price of entry for that particular model. For instance, Toyota updated its Highlander SUV for 2026, giving it standard all-wheel drive across the trim lineup — but doing so also eliminated the base LE, making the XLE the new base trim and raising the price of entry for the Highlander by nearly $5,000.
This is happening across the entire industry. Cars.com data show that the number of entry-level trims are down slightly (0.1%), making up 33% of all new-vehicle inventory. Mid-level trims are also down slightly to about 41% of the market; these trims have also seen the fastest price increases among all, with pricing up 4% year over year. While higher trims make up a smaller share of all new vehicles — just 26% — that’s an increase of 2.1% year over year, and it’s likely to increase even further in the coming years as these models carry a higher profit margin for automakers.
Read More About Affordability on Cars.com:
Hybrids Are Making a Comeback
- Takeaway: After prioritizing EVs, automakers are getting back in the business of making hybrids.
After the EV market cooled off, many automakers shifted their priorities and reinvested in hybrids. Toyota made its popular Camry hybrid-only when it was redesigned for 2025, while popular models like the Toyota RAV4 Hybrid and Honda CR-V hybrid fly off dealer lots. Other brands continue to offer hybrid versions of existing models, such as Ford’s F-150 and Kia’s Sportage, and Hyundai has now added a hybrid powertrain option for its three-row Palisade. Additionally, the average pricing for new hybrids is down 2.2% from 2024, at about $47,500 in 2025. Because of this, hybrids are selling like hotcakes, with our data showing new hybrids sold two days faster than non-hybrid vehicles in 2025.
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