The biggest challenge currently facing the automotive market seems to be affordability. According to CarGurus, new vehicles listed for less than $30,000 accounted for only 13 percent of inventory in Q1. This is a steep decline from 37 percent in Q1 2020.
Shifts in new vehicle pricing is just one of the many ways automotive affordability is driving the market through the first quarter of the year. The average list price for a new vehicle in March was $49,500, but could increase by as much as $3,300 as import tariffs go into effect according to CarGurus Quarterly Review for Q1 2025.
Despite that, there was no large increase in market urgency in most of Q1 with days to turn remaining stable across all regions.
Impending Tariffs Only Have Small Impact
“It’s no secret that the first quarter has been dominated by tariff news,” said Kevin Roberts, Director of Economic and Market Intelligence at CarGurus. “Steady consumer purchase patterns for most of the first quarter suggest a market that was in wait-and-see mode. But a shift in urgency has taken hold as impending tariffs on auto imports—which account for nearly half of new listings—start to take effect, influencing an uptick in activity on dealer lots and new car sales in recent days.”
That shift in sales occurred after the March 26 announcement of a permanent 25 percent tariff on imported passenger vehicles and light trucks. The news drove up estimated retail sales by nearly 30% month-over-month, but it remains to be seen if that momentum continued into early April.
Meanwhile, there was high import demand throughout all of Q1 with customers targeting smaller, fuel-efficient options priced under $40,000. The lone exception to this was actually Q1’s top selling model, the Toyota Tacoma. With an average list price of $46,910 the midsize pickup was responsible for 8.4 percent of total first quarter sales. The Toyota RAV4 also had a successful quarter taking up 6.5 percent of total sales and having by far the lowest market days supply. Other popular vehicles with tight supply were the Honda Civic and CR-V, Volkswagen Tiguan and Jetta, and the Kia K4.
Used Market Shifting Value
As new vehicle prices continue to increase, consumers are turning towards the used market for better deals, but that decision is not without its own flaws. Affordable used vehicles are, on average, older with more miles than they were five years ago. In 2020, a range of $10,000 to $15,000 would have been a six-year-old car with roughly 70,000 miles, in 2025 the average used vehicle in that budget is now a nearly ten-year-old car with 100,000 miles. This trend is consistent among all price brackets with used cars sales over $50,000 the only place where slightly newer cars are being sold than in 2020.
Overall, pricing has also shifted upward as just 42.7 percent of used sales are under $20,000 in 2025, down from 63.7 percent in 2020. However, this is still an improvement over 2022, when only 34.8 percent of sales were below the $20,000 threshold.
EVs Gaining Ground
The one area where the used market is still making substantial gains is with EVs. Used EVs have increased their presence on the market, often with significantly fewer miles than their internal combustion engine counter parts. Even with the average used EV price sitting at $36,000, the low mileage and practicality of the vehicles is driving sales. That average price has also leveled out from a nearly $65,000 peak in 2022.
When low-mileage and lower prices come together, EVs have really begun to see growth. Used EVs under $30,000 are consistently selling faster than similarly priced combustion engine models. Vehicles like the Nissan LEAF and Hyundai Ioniq Electric are positioned right in that sweet spot, offering average list prices of under $17,000 with average milage below 35,000.
As the market focuses more on affordable vehicles throughout the year, price and inventory trends will remain an important barometer for consumer intent. Finding the right levels of value and affordability will be a crucial step to increasing sales.
