Fuel costs rise again and the car market feels the strain

Gas prices return to higher levels

The cost of fuel is rising again, posing a challenge to drivers who may have previously benefited from lower prices. The national average gas price ticked up to $3.10 per gallon on November 20, 2025, according to AAA.

This price point effectively ended any “discount,” as it was nearly identical to the $3.10 average reported on November 7, 2024. This stability, however, comes at a high price, maintaining pressure on car buyers. In September 2025, the average new-vehicle transaction price surpassed $50,000 for the first time, according to Kelley Blue Book.

Light truck and SUV sales slow due to fuel concerns

Due to the upward trend in gasoline prices, sales of large, less fuel-efficient vehicles have been affected. Total U.S. new light vehicle sales decreased by 5.2% in October 2025 compared to the same month last year, indicating broader consumer hesitation.

Within this market, the sales volume for light trucks (including SUVs and pickups) decreased by 2.5% year-over-year in October 2025. Passenger cars, which are typically smaller and more efficient, saw a steeper 16.8% decline in sales, suggesting general market softness driven by high prices across the board.

Used car prices climb as buyers seek value

The continuing high cost of new cars, fueled by inflation and high gas prices, has increased demand for used vehicles, which drives up prices.

This price pressure caused the average time a used car sat on a dealer lot to rise to 41 days in the third quarter of 2025, which is the slowest pace since 2017. Meanwhile, used electric vehicles (EVs) bucked this trend, selling faster than any other type of vehicle.

Hybrid technology sees massive growth over BEVs

The threat of unstable gas prices has made hybrid vehicles a significant success for drivers seeking efficiency. Hybrids gained market share in 2025; by October, HEVs accounted for 14.2% of retail sales, while EVs accounted for 5.2%, according to J.D. Power.

This impressive growth rate exceeded that of Battery Electric Vehicles (BEVs) during the same period. The total market share for Internal Combustion Engine (ICE) vehicles saw a significant decline, contracting by 4.6% year-over-year in the first quarter of 2025. This data confirms that buyers are quickly shifting away from pure gasoline power.

Competition closes the EV and gasoline car price gap

Rising gasoline prices and competitive pricing from manufacturers are rapidly closing the upfront cost difference between Electric Vehicles (EVs) and gas cars. KBB reports $48,699 as the April 2025 ATP for new vehicles; globally, IEA notes EV–ICE price gaps vary by segment (e.g., <15% for small cars; <25% for SUVs in 2024).

This shrinking difference makes the move to electric cars more attractive, especially since charging an EV typically costs three to five times less per mile than refueling a gasoline car.

Record-long loans reflect driver affordability strain

Because overall car costs rise alongside unpredictable fuel prices, consumers are stretching their finances to manage high monthly payments. The average amount financed for new-vehicle purchases hit a record high of $42,388 in the second quarter of 2025.

This pressure led to the share of new-car buyers taking on the longest loan terms (84 months or more) reaching a record of 22.4% of new vehicle financing in the second quarter of 2025. Furthermore, 19.3% of new-car buyers committed to monthly payments of $1,000 or more in the same quarter.

Car company stockpiles grow as demand slows

As demand slows down, the number of new vehicles sitting on dealer lots has increased across the industry. The total vehicle inventory across the U.S. reached 2.87 million units at the beginning of October 2025.

This massive stockpile grew by 4.0% just from the previous month, September 2025. This rise pushed the overall market days’ supply to 84 days in early October 2025, the highest inventory level recorded since the first quarter of 2025.

Big car makers have mixed results on sales

Major car companies saw very different sales results in the market during the autumn sales season. In October 2025, General Motors’ (GM) total sales volume decreased by 5.9% compared to the same month in the previous year.

In contrast, Toyota’s total sales volume showed a strong performance, increasing by 11.8% in October 2025. Meanwhile, Hyundai’s total sales volume was down 2% in October 2025. These mixed sales results show that while some consumers are still buying, overall market momentum is slowing down.

Tesla’s slowing sales contrast with wider EV availability

As more brands release electric cars, competition for Tesla is increasing. In October 2025, Tesla’s sales volume declined sharply by 30.4% compared to the same period last year, indicating a shift in the market toward competitors.

The EV segment’s market share plunged to just 5.3% of new vehicle sales in October 2025, down from 12.9% in September. However, the total number of EV models available to US shoppers continues to grow, reaching 149 EV models in the first quarter of 2025.

Loan terms are worsening due to higher interest

Financing a new vehicle has become more expensive and difficult for American buyers due to rising interest rates. The average Annual Percentage Rate (APR) for a new car loan was 6.73% in the first quarter of 2025.

To keep monthly payments low, the average loan term for a new car reached 68.63 months in the first quarter of 2025. The average loan term for a used car was also lengthy at 67.22 months in the first quarter of 2025.

Negative equity poses risk to new car buyers

Negative equity is a growing problem where a driver owes more on their old car than its value, which they must roll into a new loan. A record 28.1% of trade-ins toward new-car purchases had negative equity in the third quarter of 2025.

The average amount owed on upside-down loans reached a record of $6,905 in the third quarter of 2025. Furthermore, nearly one in four (24.7%) of negative-equity trade-ins carried more than $10,000 in debt in the third quarter of 2025.

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More electric vehicles are on the road

The total number of electric vehicles (EVs) on US roads is growing daily, indicating a steady shift in the country’s car fleet. As of the first quarter of 2025, there were nearly 6.2 million EVs in operation across the United States.

This growing fleet of EVs represents 2.13% of all light vehicles in operation across the nation. To support this demand, the total number of public charging ports in the country increased by 5% from the end of 2024 to the first quarter of 2025.

Curious why many classic performance models are reaching the end of their gasoline era? Find out in why gas powered muscle cars are nearing the finish line.

Will higher fuel costs change how you drive this month? Share your thoughts below.

Read More From This Brand:

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This slideshow was made with AI assistance and human editing.