Car prices are indeed going up again, driven by supply chain issues, high demand, and inflation. Whether you’re eyeing an SUV or another vehicle, understanding these trends can help you make smarter buying decisions.
If you’ve been thinking about buying a new SUV lately, you’ve probably noticed something: car prices are going up again. It’s not just your imagination. Across the U.S. and much of the world, vehicle prices—especially for popular models like SUVs—are climbing. Whether you’re shopping for a compact crossover or a full-size family hauler, the days of easy deals and deep discounts feel like a distant memory.
So, what’s behind this latest surge? A mix of economic forces, supply chain headaches, and shifting consumer habits are all playing a role. While the pandemic initially caused a dip in car prices, the rebound has been steep and sustained. Now, even as production slowly recovers, demand continues to outstrip supply. And with inflation still affecting everyday costs, buying a car feels more expensive than ever.
But don’t panic. Understanding why prices are rising—and what you can do about it—can help you make a smarter, more confident decision. Whether you’re a first-time buyer or upgrading your current ride, knowing the market trends gives you an edge.
Key Takeaways
- Car prices are rising due to ongoing supply chain disruptions and semiconductor shortages. These bottlenecks limit new vehicle production, pushing prices higher.
- High consumer demand for SUVs and trucks is outpacing supply. Buyers are prioritizing space, safety, and versatility, especially post-pandemic.
- Inflation and rising interest rates are making financing more expensive. Monthly payments are increasing even if sticker prices stabilize.
- Used car prices remain elevated, offering little relief. With fewer new cars available, used vehicles are in high demand and costly.
- Electric and hybrid SUVs are seeing faster price increases. Demand for eco-friendly options is growing, but production can’t keep up.
- Dealership markups and add-ons are more common. Some dealers are charging over MSRP due to low inventory and high interest.
- Timing your purchase and shopping around can save thousands. Research, negotiate, and consider off-peak buying seasons.
📑 Table of Contents
Why Are Car Prices Going Up Again?
The short answer? Supply and demand. But the full picture is more complex. Several key factors are pushing car prices higher, and they’re not going away overnight.
Semiconductor Shortages Continue to Bite
One of the biggest culprits is the ongoing shortage of semiconductors—the tiny chips that power everything from infotainment systems to engine controls. These chips are essential in modern vehicles, especially SUVs packed with tech features.
Even though production has improved since the worst of the pandemic, chip supplies remain tight. Automakers are prioritizing high-margin vehicles like SUVs and trucks, but that doesn’t mean there’s enough to go around. As a result, factories are running below capacity, and new vehicle inventory is still low. Fewer cars on lots mean higher prices.
High Demand for SUVs Shows No Sign of Slowing
SUVs have been the top choice for American drivers for years, and that trend is stronger than ever. Families love their space, safety ratings, and all-weather capability. But even beyond practicality, SUVs offer a sense of security and status that sedans and hatchbacks often don’t.
With remote work fading and travel returning, people are hitting the road again—and they want vehicles that can handle long drives, rough terrain, and growing families. This sustained demand means automakers can charge more, and buyers are often willing to pay it.
Inflation and Rising Interest Rates Add Pressure
It’s not just the sticker price that’s going up—it’s the cost of borrowing, too. The Federal Reserve has raised interest rates to combat inflation, which means auto loan rates are higher than they’ve been in over a decade.
For example, a $40,000 SUV financed at 7% interest over 60 months will cost you nearly $700 more in interest than the same loan at 4%. That adds up fast. Even if the car price stays the same, your monthly payment could jump significantly.
The Used Car Market Is Still Hot
You might think buying used is the way to avoid high prices—but think again. The used car market remains incredibly competitive.
Fewer New Cars Mean More Demand for Used Ones
When new vehicle production slowed during the pandemic, fewer cars were sold. That means fewer trade-ins and lease returns, which are major sources of used inventory. With fewer used cars available, prices have stayed high.
According to industry reports, the average price of a used SUV is still well above pre-pandemic levels. In some cases, a two-year-old model might cost almost as much as a new one—especially if it’s a popular brand like Toyota, Honda, or Subaru.
Certified Pre-Owned (CPO) Programs Are in High Demand
Many buyers are turning to certified pre-owned SUVs for peace of mind. These vehicles come with extended warranties, thorough inspections, and often low mileage. But because they’re so desirable, CPO prices are also elevated.
For instance, a certified 2022 Honda CR-V might list for $32,000—just $5,000 less than a brand-new model. While you’re saving some money, you’re still paying a premium for reliability and warranty coverage.
Electric and Hybrid SUVs Are Driving Price Increases
The shift toward electric vehicles (EVs) is reshaping the market—and not always in a way that saves you money.
High Demand, Limited Supply for EVs
Electric SUVs like the Tesla Model Y, Ford Mustang Mach-E, and Hyundai Ioniq 5 are in high demand. But production can’t keep up. Battery materials like lithium and nickel are expensive and hard to source, and charging infrastructure is still catching up.
As a result, EV SUVs often have long waitlists and high prices. Even with federal and state incentives, the out-of-pocket cost can be steep. For example, a base Model Y starts around $50,000—and that’s before options, taxes, and fees.
Hybrids Offer a Middle Ground—But Prices Are Rising Too
Hybrid SUVs, like the Toyota RAV4 Hybrid or Ford Escape Hybrid, are a popular compromise between gas and electric. They offer better fuel economy without the range anxiety of full EVs.
But even these models are seeing price hikes. Toyota, for instance, has increased the RAV4 Hybrid’s price by over $2,000 in the past two years. With strong demand and limited supply, automakers have little reason to discount.
Dealership Markups and Add-Ons Are Common
If you walk into a dealership today, you might be surprised—or frustrated—by what you see.
“Market Adjustment” Fees Are Back
Some dealers are adding “market adjustment” fees to popular SUVs, charging thousands over the manufacturer’s suggested retail price (MSRP). These markups are legal in most states, and they’re becoming more common as inventory remains low.
For example, a dealer might list a new Ford Explorer for $55,000—even though the MSRP is $48,000. That $7,000 markup can be hard to negotiate down, especially if the vehicle is in high demand.
Mandatory Add-Ons Increase the Final Price
Dealers are also bundling in expensive add-ons like paint protection, fabric guards, and extended warranties—sometimes making them mandatory. These extras can add $2,000 or more to your purchase price.
While some of these services have value, many are overpriced. Always ask what’s included and whether you can decline certain packages.
How to Navigate the Rising Car Market
So, what can you do if you need a new SUV but don’t want to overpay? Here are some practical tips.
Shop During Off-Peak Seasons
Dealers are busiest in spring and summer. If you can wait, consider shopping in late fall or winter. You’ll face less competition and may find better deals as dealers try to clear inventory before the new model year.
Expand Your Search Radius
Don’t limit yourself to local dealers. Use online tools to compare prices across multiple states. Some dealers offer home delivery, so you might find a better deal 200 miles away.
Negotiate the Out-the-Door Price
Instead of focusing on monthly payments, negotiate the total out-the-door price. This includes taxes, fees, and add-ons. Knowing this number upfront prevents surprises at the end.
Consider Slightly Older Models or Last Year’s Edition
New model years often come with price increases. A 2023 SUV might cost $2,000 more than a 2022 model with nearly identical features. If you don’t need the latest tech, an older model can save you money.
Get Pre-Approved for Financing
Before visiting a dealer, get pre-approved for a loan from your bank or credit union. This gives you leverage and helps you avoid high dealer financing rates.
Be Patient and Flexible
If you don’t need a car immediately, consider waiting. Prices may stabilize as supply improves. In the meantime, keep an eye on incentives, rebates, and lease deals.
The Bottom Line
Yes, car prices are going up again—and they’re likely to stay high for the foreseeable future. But that doesn’t mean you’re out of options. By understanding the market, shopping smart, and staying flexible, you can still find a great SUV at a fair price.
The key is to do your research, avoid rushing into a deal, and keep your long-term budget in mind. Whether you’re buying new, used, or leasing, knowledge is your best tool in today’s challenging car market.
Frequently Asked Questions
Why are SUV prices increasing more than other vehicles?
SUVs are in extremely high demand due to their space, safety, and versatility. At the same time, automakers are prioritizing SUV production because they offer higher profit margins. This combination of high demand and limited supply drives prices up faster than for sedans or hatchbacks.
Will car prices go down in 2024?
It’s possible, but unlikely to drop significantly. While supply chains are improving, demand remains strong, and inflation continues to affect costs. Experts predict a gradual stabilization, but prices may stay above pre-pandemic levels for years.
Is it better to buy new or used right now?
It depends on your budget and needs. New cars offer the latest features and warranties but come at a premium. Used cars can save money upfront, but high demand means prices are still elevated. Certified pre-owned models offer a middle ground with added peace of mind.
How can I avoid dealer markups?
Research the fair market value of the SUV you want using tools like Kelley Blue Book or Edmunds. Be prepared to walk away if a dealer insists on overcharging. Shopping at multiple dealerships and negotiating the out-the-door price can also help you avoid unnecessary markups.
Are electric SUVs worth the higher price?
Electric SUVs offer long-term savings on fuel and maintenance, and they’re better for the environment. However, the upfront cost is high, and charging infrastructure varies by location. If you drive a lot and have access to charging, an EV SUV could be a smart investment.
Should I wait to buy a car if prices are high?
If you don’t need a vehicle urgently, waiting a few months could pay off. Watch for seasonal sales, new model releases, or changes in interest rates. However, if you need a car now, focus on finding the best deal possible rather than waiting indefinitely.