The high price of automobiles is one of the greatest banes in the consumer, commuter existence. We’re always wondering, “Will cars get cheaper?” In a recent post on his YouTube channel, personal finance guru and financial influencer Jaspreet Singh explored whether car prices will fall in 2025.
Singh brought a personal element to this post, sharing that he just bought a new Toyota Rav 4. “I can tell you that buying a brand new car is expensive,” Singh said, adding that it’s even more expensive if you’re taking a loan. Let’s dig into his thoughts on whether car prices will drop this year.
If you really want to know whether car prices will go down in 2025, you need to look at what’s going on with auto companies. Are they faring alright? The answer here provides a big clue, but it is not a straightforward one. How car companies are faring is all over the place.
“Some car companies are struggling to make money,” Singh said. “Some car companies are getting worried about the potential tariffs. And some car companies are booming.”
So, with that said, there’s not really a one-size-fits-all answer to the question of whether car prices will fall across the board. Some of that depends on what’s going on internally at auto manufacturers. That said, there are some big hints that prices will go down a bit overall.
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We saw car prices surge during the pandemic, and this was tied to an inventory shortage. In classic economics style, demand went up and supply went down, resulting in higher prices. But this year, the auto industry appears to be finally back on track with sufficient inventory for buyers.
“If you see an increase in the inventory of cars, that means we have more cars available for sale,” Singh said. “And if you have more cars available for sale, that puts more pressure on the dealer who has this lot full of cars to get rid of the cars.”
The opposite happens when a dealer doesn’t have a lot of inventory. In that case, they’re enabled to drive up prices of what is available because there just simply isn’t enough to go around for every interested buyer. Because inventory is surging in 2025, we have reason to anticipate lower prices and more incentives to buy than we saw when inventory was dry.
Though Singh’s point about an increase in auto supply is good news for car buyers looking to get the best price, it doesn’t change the fact that the average price of a new car is, for many, prohibitively steep. It’s skyrocketed since 2019.