Are Cars Still Expensive

Car prices have stabilized after pandemic spikes, but they’re still higher than pre-2020 levels. SUVs, in particular, remain a premium segment due to demand, features, and production costs.

Key Takeaways

• Car prices are no longer skyrocketing, but they haven’t dropped to pre-pandemic levels. Supply chain recovery has eased pressure, but inflation and high demand keep prices elevated.
• SUVs are among the most expensive vehicle types. Their popularity, larger size, and advanced tech contribute to higher price tags across all classes.
• New car prices average over $48,000 in 2024. This includes compact SUVs starting around $28,000 and luxury models exceeding $70,000.
• Used car prices have cooled significantly. After peaking in 2021–2022, the used market offers better deals, especially for 3–5-year-old models.
• Electric SUVs come with a premium price. While long-term savings on fuel and maintenance help, upfront costs remain 15–30% higher than gas-powered equivalents.
• Financing and insurance add to the total cost. Higher interest rates and rising insurance premiums mean owning a car is more expensive beyond the sticker price.
• Smart shopping can save thousands. Timing your purchase, comparing trims, and considering certified pre-owned options help reduce costs.

Are Cars Still Expensive? The Real Price of Owning a Vehicle in 2024

If you’ve shopped for a car recently, you’ve probably noticed that prices aren’t exactly what they used to be. Remember when a $25,000 compact SUV felt like a splurge? Now, that same vehicle might start closer to $30,000—and that’s before adding popular options like all-wheel drive, advanced safety features, or upgraded infotainment systems.

The good news? The wild price surges of 2021 and 2022 have slowed. The bad news? Cars are still expensive. And if you’re eyeing an SUV—the most popular vehicle type in America—you’ll likely feel that pinch even more. But why? And what can you do about it?

In this guide, we’ll break down the current state of car pricing, why SUVs cost what they do, and how you can make smarter decisions when buying your next ride.

Why Are Cars Still So Expensive?

It’s no secret that car prices jumped during the pandemic. Factory shutdowns, semiconductor shortages, and shipping delays created a perfect storm. Dealers had fewer cars, but people still wanted to buy—especially as remote work made personal vehicles more essential. That imbalance drove prices up across the board.

But even as supply chains have improved and inventory levels rise, prices haven’t dropped back to 2019 levels. Here’s why:

Inflation and Rising Production Costs

Everything costs more these days—steel, aluminum, electronics, and labor. Automakers are passing some of these costs to consumers. For example, the average cost of raw materials for a new car has increased by over 20% since 2020.

High Consumer Demand for SUVs

SUVs now make up more than 60% of new vehicle sales in the U.S. Their popularity isn’t just about style—it’s about space, safety, and versatility. But high demand means automakers can charge more, especially for top-selling models like the Toyota RAV4, Honda CR-V, and Ford Explorer.

More Standard Features = Higher Base Prices

Today’s SUVs come loaded with tech that was once optional or reserved for luxury brands. Think adaptive cruise control, lane-keeping assist, wireless Apple CarPlay, and panoramic sunroofs. These features improve safety and convenience, but they also increase manufacturing costs.

Electric and Hybrid Premiums

Electric SUVs like the Tesla Model Y, Ford Mustang Mach-E, and Hyundai Ioniq 5 are gaining traction. But they come with a premium price tag—often $10,000 to $20,000 more than their gas-powered counterparts. Battery technology, limited production scale, and R&D costs all contribute to this gap.

How Much Does a New SUV Really Cost?

Let’s look at real-world pricing to understand the current landscape.

Compact SUVs: The Entry Point

Compact SUVs are the most affordable segment and a favorite for families and commuters. In 2024, the average starting price is around $28,000 to $35,000. For example:
– Honda CR-V: Starts at $29,500
– Toyota RAV4: Starts at $28,475
– Mazda CX-5: Starts at $27,850

But watch out—adding AWD, higher trims, or packages can easily push the price past $35,000.

Midsize and Large SUVs: Space Comes at a Cost

If you need more room for passengers or cargo, midsize and large SUVs are the way to go. These vehicles start higher and climb fast:
– Ford Explorer: Starts at $38,000
– Chevrolet Traverse: Starts at $37,500
– Toyota Highlander: Starts at $40,500

Luxury midsize SUVs like the BMW X5 or Mercedes-Benz GLE can start above $60,000 and exceed $80,000 with options.

Luxury and Performance SUVs: The Premium Tier

At the top end, performance and luxury SUVs command serious prices. Models like the Porsche Cayenne, Range Rover Sport, or Audi Q8 start around $70,000 and can easily top $100,000. These vehicles offer high-end materials, powerful engines, and cutting-edge tech—but they’re not for budget buyers.

Used Cars: A Better Deal, But Not What It Used to Be

During the pandemic, used car prices soared. A 3-year-old SUV could cost more than a brand-new base model. That bubble has burst, but used cars are still pricier than in 2019.

Used SUV Prices Have Cooled

According to industry data, used car prices dropped about 10–15% from their 2022 peak. A 2021 Honda CR-V that once sold for $32,000 now goes for around $27,000. That’s a better deal, but it’s still $5,000 more than similar models from 2019.

Certified Pre-Owned (CPO) Is Worth Considering

CPO programs offer used cars with extended warranties, inspections, and roadside assistance. While they cost more than private-sale vehicles, they provide peace of mind. For example, a CPO 2022 Toyota RAV4 might cost $30,000—about $2,000 more than a non-certified version—but includes a 7-year/100,000-mile powertrain warranty.

Timing Matters

The best time to buy a used SUV is late fall or winter, when demand dips. Avoid spring and summer, when families shop for vehicles before vacations.

The Hidden Costs of Owning an SUV

The sticker price is just the beginning. Here are other expenses that make car ownership more expensive in 2024.

Financing: Higher Interest Rates

The Federal Reserve’s rate hikes have pushed auto loan rates up. The average rate for a new car loan is now around 7–8%, compared to 4–5% in 2021. On a $40,000 loan over 60 months, that’s an extra $3,000 in interest.

Insurance: Rising Premiums

Car insurance costs have increased due to higher repair costs, more accidents, and inflation. SUVs, especially larger or luxury models, often have higher premiums. For example, insuring a Ford Explorer costs about 15% more than a compact SUV like the Hyundai Tucson.

Fuel and Maintenance

While many SUVs now offer hybrid or efficient turbocharged engines, larger models still consume more fuel. A full-size SUV like the Chevrolet Tahoe averages 18 MPG combined—costing over $2,500 a year in gas at current prices.

Maintenance also adds up. SUVs have more complex systems, and parts can be pricier. Regular oil changes, tire rotations, and brake service are essential to avoid costly repairs.

How to Save Money When Buying an SUV

Yes, cars are expensive—but you don’t have to overpay. Here’s how to get the best deal.

Shop at the Right Time

Dealers are most motivated at the end of the month, quarter, or model year. Visit in late December to take advantage of holiday incentives and clearance pricing on outgoing models.

Compare Trims and Options

The base model of an SUV often offers the best value. Higher trims add luxury features you may not need. For example, the difference between a base and top-trim RAV4 can be $10,000—but you might only use half the added features.

Consider a Hybrid or Efficient Model

Hybrid SUVs like the Toyota RAV4 Hybrid or Ford Escape Hybrid offer better fuel economy without sacrificing space. They cost a bit more upfront but save money on gas over time.

Negotiate and Use Incentives

Don’t accept the first offer. Use online pricing tools like Kelley Blue Book or Edmunds to research fair market value. Also, check for manufacturer rebates, loyalty bonuses, or military discounts.

Lease vs. Buy: What’s Better?

Leasing can lower monthly payments, but you don’t build equity. Buying makes sense if you plan to keep the SUV for 5+ years. For most people, buying a reliable used SUV offers the best long-term value.

The Future of Car Prices: What to Expect

Experts predict that car prices will remain relatively stable through 2024 and into 2025. Inflation may ease slightly, and electric vehicle production will ramp up, potentially lowering EV costs. However, SUVs will likely stay expensive due to ongoing demand.

One trend to watch: more affordable electric SUVs. Brands like Hyundai, Kia, and Chevrolet are launching models under $40,000 with federal tax credits. These could reshape the market in the next few years.

Final Thoughts: Are Cars Still Expensive?

The short answer? Yes—but it’s not as bad as it was two years ago. Car prices have plateaued, and the market is slowly returning to normal. SUVs, while still a premium purchase, offer unmatched versatility and safety for families and adventurers alike.

The key is to shop smart. Do your research, compare options, and consider total ownership costs—not just the sticker price. Whether you’re buying new, used, or leasing, there are ways to get a great SUV without breaking the bank.

In today’s market, being an informed buyer is your best tool for saving money and finding the right vehicle for your lifestyle.

Frequently Asked Questions

Are car prices going down in 2024?

Car prices have stabilized and are no longer rising rapidly, but they haven’t dropped significantly. While used car prices have cooled, new vehicles remain expensive due to inflation and high demand for SUVs.

Why are SUVs more expensive than sedans?

SUVs cost more because they’re larger, use more materials, and come with advanced safety and tech features. Their popularity also allows automakers to charge a premium.

Is it better to buy a new or used SUV?

It depends on your budget and needs. New SUVs offer the latest features and warranties, while used models provide better value. A certified pre-owned SUV can be a smart middle ground.

How much should I budget for a new SUV?

For a new compact SUV, budget at least $30,000. Midsize models start around $38,000, and luxury SUVs can exceed $60,000. Don’t forget to factor in taxes, fees, insurance, and financing.

Are electric SUVs worth the extra cost?

Electric SUVs have higher upfront costs but save money on fuel and maintenance. If you drive a lot and have access to charging, they can be a great long-term investment.

What’s the best time of year to buy an SUV?

The best time is late fall or winter, especially December, when dealers offer incentives to meet annual sales goals. Avoid spring and summer when demand peaks.