Are Cars Still Overpriced

Car prices surged during the pandemic, but are they still overpriced in 2024? While new SUVs remain above pre-2020 levels, increased inventory and slowing demand are helping buyers regain negotiating power. Smart shoppers who time their purchases and consider certified pre-owned options can find great value without overpaying.

If you’ve been eyeing a new SUV lately, you’ve probably noticed something: prices still feel steep. Even as the chaos of the pandemic begins to fade, car buyers are left wondering—are cars still overpriced? The short answer? It’s complicated. While we’re not seeing the wild dealer markups and inventory shortages of 2021 and 2022, new vehicle prices remain significantly higher than they were just a few years ago. For SUV shoppers—who make up nearly 60% of the new car market—this reality hits especially hard.

But here’s the good news: the market is shifting. Supply chains have improved, inventory is slowly climbing, and consumer demand is softening in some segments. That means buyers are regaining some leverage. Still, calling today’s SUVs “overpriced” depends on how you define value. Are they more expensive than in 2019? Absolutely. Are they worth it? That depends on your needs, timing, and willingness to shop smart.

Key Takeaways

📑 Table of Contents

Why Car Prices Shot Up (And Why They Haven’t Come All the Way Down)

To understand whether cars are still overpriced, it helps to rewind a bit. In 2020, the pandemic disrupted everything—including how we buy cars. Factory shutdowns, semiconductor shortages, and shipping delays created a perfect storm. With fewer new vehicles available and strong demand (thanks to low interest rates and stimulus checks), prices soared.

The Role of Supply and Demand

When supply drops and demand stays high, prices rise. That’s basic economics—and it’s exactly what happened. Automakers couldn’t build enough SUVs to meet demand, so dealers added “market adjustment” fees, sometimes $5,000 or more above MSRP. Buyers, eager to upgrade or replace aging vehicles, often paid up.

Inflation and Production Costs

It wasn’t just scarcity driving prices. Inflation pushed up the cost of raw materials like steel, aluminum, and lithium (used in EV batteries). Labor costs rose too, as automakers competed for skilled workers. These increases got passed down to consumers. Even as supply chains recover, many of these cost pressures remain.

Shift to Higher-Trim and Luxury Models

Another factor? Automakers pivoted toward more profitable vehicles. With chip shortages limiting production, they prioritized building high-end trims and luxury SUVs—models with bigger margins. This shifted the average transaction price upward, even if base models didn’t change much.

Are SUVs Still Overpriced in 2024?

Are Cars Still Overpriced

Visual guide about Are Cars Still Overpriced

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So, are SUVs overpriced today? Let’s look at the data. According to Kelley Blue Book, the average transaction price for a new vehicle in mid-2024 was around $48,000—down slightly from the 2022 peak of over $50,000, but still well above the $38,000 average in 2019. For SUVs, the numbers are even higher. Midsize SUVs like the Toyota Highlander or Honda Pilot now start near $40,000, while luxury models like the BMW X5 or Mercedes GLE can easily exceed $70,000.

New vs. Pre-Pandemic Pricing

Compare a 2024 Honda CR-V to its 2019 counterpart. The 2019 model started around $25,000. The 2024 version? About $32,000. That’s a 28% increase—far outpacing general inflation. And that’s before adding popular options like all-wheel drive, advanced safety tech, or premium interiors.

Are You Paying for More—or Just Paying More?

Here’s where it gets tricky. Today’s SUVs come loaded with features that didn’t exist (or weren’t standard) five years ago. Think adaptive cruise control, wireless Apple CarPlay, panoramic sunroofs, and hybrid powertrains. So part of the price increase reflects real added value. But is it enough to justify a 25–30% jump? For many buyers, the answer is no—especially when base models now cost what mid-trim versions did in 2019.

The Rise of Dealer Markups—And Their Slow Decline

One of the most frustrating aspects of recent car buying was dealer markups. With inventory low, some dealers added thousands in “market adjustment” fees, especially on hot models like the Toyota RAV4 Hybrid or Ford Bronco. These markups weren’t based on MSRP—they were pure profit.

Markups Are Dropping—But Not Gone

Thankfully, the worst of the markup frenzy has passed. Improved production and cooling demand have forced many dealers to drop or reduce these fees. However, they’re not extinct. High-demand models—especially hybrids, EVs, and limited-edition SUVs—can still carry markups, particularly in regions with strong buyer interest.

How to Spot and Avoid Markups

Always check the Monroney sticker (the window label) for the true MSRP. If the dealer is asking significantly more, ask for a breakdown. Be wary of vague fees like “prep” or “destination” charges that seem inflated. And remember: you don’t have to buy today. Walk away if the price feels unfair.

Certified Pre-Owned SUVs: The Smart Alternative

If new SUV prices feel out of reach, consider certified pre-owned (CPO) vehicles. These aren’t your average used cars. CPO SUVs are typically 1–3 years old, have low mileage, and undergo rigorous inspections. They also come with extended manufacturer warranties—often covering up to 100,000 miles.

Why CPO Makes Financial Sense

A 2022 Toyota RAV4 Hybrid CPO might cost $34,000—compared to $42,000 for a new one. That’s an $8,000 savings for a vehicle that’s barely broken in. Plus, you avoid the steepest part of depreciation, which hits new cars hardest in the first year.

What to Look for in a CPO SUV

Stick with manufacturer-certified programs (like Honda Certified, Ford Gold, or Hyundai CPO) for the best coverage. Check the vehicle history report, warranty terms, and included services (like roadside assistance). And always take it for a test drive—just like you would a new car.

The Hidden Cost: Rising Interest Rates

Even if SUV prices stabilize, monthly payments are rising—thanks to higher interest rates. In 2021, average auto loan rates were around 4%. By mid-2024, they’ve climbed to over 7% for new cars and nearly 11% for used vehicles.

How Rates Affect Affordability

Let’s say you’re financing a $45,000 SUV over 60 months. At 4%, your monthly payment is about $825. At 7%, it jumps to $870. Over the life of the loan, that’s an extra $2,700 in interest. For buyers on a tight budget, that difference can be the deciding factor.

Tips to Lower Your Rate

Improve your credit score before applying. Shop around with banks, credit unions, and online lenders—don’t just accept the dealer’s financing. And consider a shorter loan term if you can afford higher payments; you’ll pay less interest overall.

How to Avoid Overpaying for Your Next SUV

The key to beating high prices? Be strategic. Here’s how:

Time Your Purchase Right

Dealers are most motivated at the end of the month, quarter, or year—when they’re trying to hit sales targets. Holiday weekends (like Memorial Day or Labor Day) also bring special incentives. Avoid buying right after a new model year launch, when prices are highest.

Use Pricing Tools

Websites like Edmunds, Kelley Blue Book, and TrueCar show you what others are paying in your area. This gives you leverage when negotiating. Print out the “fair market price” and bring it to the dealership.

Negotiate the Price, Not the Payment

Dealers love to focus on monthly payments because they can hide fees and loan terms. Instead, negotiate the out-the-door price—the total amount you’ll pay, including taxes and fees. Know your budget and stick to it.

High-demand SUVs (like the RAV4 or CR-V) often carry premiums. Look at slightly less popular but well-reviewed alternatives—like the Mazda CX-5, Subaru Forester, or Hyundai Santa Fe. They offer similar features at lower prices.

Conclusion: Are Cars Still Overpriced?

So, are cars—especially SUVs—still overpriced? In absolute terms, yes. Prices are higher than they were before the pandemic, and interest rates are adding to the burden. But the market is no longer the wild west of 2021. Inventory is improving, markups are fading, and buyers have more tools than ever to find fair deals.

The real question isn’t whether SUVs are overpriced—it’s whether you’re overpaying. With research, timing, and smart shopping, you can drive away in a reliable, feature-packed SUV without breaking the bank. Whether you choose new, CPO, or wait for a better deal, the power is increasingly in your hands.

Frequently Asked Questions

Are car prices expected to drop in 2024?

Car prices are stabilizing and may see slight declines in some segments, but a return to pre-pandemic levels is unlikely. Improved inventory and softening demand are helping, but high production costs and interest rates keep prices elevated.

Why are SUVs more expensive than sedans?

SUVs cost more to build due to larger frames, all-wheel-drive systems, and more advanced tech. They’re also in higher demand, allowing automakers to charge premium prices.

Is it better to buy new or used in 2024?

It depends on your budget and needs. New SUVs offer the latest features and full warranties, but CPO used models provide significant savings with minimal trade-offs in quality.

How can I avoid dealer markups?

Research fair market prices, avoid high-demand models during shortages, and be willing to walk away. Shopping at multiple dealerships and negotiating the out-the-door price also helps.

Do SUVs hold their value better than other vehicles?

Yes, SUVs—especially popular models from Toyota, Honda, and Subaru—tend to retain value well due to strong resale demand and reliability reputations.

Should I wait to buy an SUV in 2025?

If you need a vehicle now, don’t wait. Prices aren’t expected to drop dramatically. But if you can delay, watching for year-end sales or new model incentives in late 2024 could yield better deals.