Price of new cars

The index is projected to edge up to about 179.77 in 2026, marginally above its 2023 peak of 178.90, underscoring how the intense price escalation phase of 2021-2022 has given way to a plateau. Easing supply bottlenecks in semiconductors and components have allowed production and dealer inventories to rebuild, removing some of the extreme pricing power manufacturers and dealers enjoyed when lots were empty. At the same time, producers are still passing through higher structural costs for labor, materials and embedded technology, which keeps the index near record levels even as month-to-month increases moderate.

Over the past five years, new car prices have shifted from a steady pre-pandemic trend to a step-change higher level driven by acute supply shocks and strong demand. Pandemic-related plant shutdowns, logistics disruptions and, most critically, a global semiconductor shortage slashed vehicle output and drove new-vehicle prices to jump 16.9% in 2021 and 2022 as incentives disappeared and dealers sold limited stock at or above sticker.

At the same time, broad inflation pushed up input costs for steel, aluminum and other key components, while tight labor markets raised wages across auto manufacturing and parts suppliers, embedding higher production costs into wholesale prices. The accelerating rollout of advanced driver-assistance systems, infotainment and connectivity, plus the growing mix of electric and hybrid models, further lifted average vehicle content and supported higher transaction values.

By 2024-2025, chip and parts availability improved and production rebounded, but with inventories still below historic norms and manufacturers favoring high-margin trucks and SUVs, the index settled into a higher plateau rather than retreating toward pre-2020 levels.