Planning for a Luxury Car Purchase
The average transaction price for new cars in April 2025 was $48,699, according to Kelley Blue Book, making many vehicles feel like luxury items. However, true luxury cars come in various classifications, and understanding these can help you plan your savings.
Luxury Car Classifications
ChatGPT provided insights into three main categories of luxury vehicles:
- Entry-level luxury: $45,000-$60,000 (Lexus IS, Audi A4, BMW 3 Series)
- Mid-tier luxury: $70,000-$90,000 (BMW 5 Series, Mercedes E-Class, Tesla Model S)
- High-end luxury: $100,000-$150,000+ (Porsche 911, Mercedes S-Class, Audi A8)
Predicting Future Luxury Car Prices
Historical data shows that new car average transaction prices jumped 34% between Q4 2019 and Q4 2024. However, prior to 2019, prices grew at a steadier 3% annual rate. Using a 3% annual inflation rate, a current $80,000 luxury car would cost approximately $92,740 in five years.
Monthly Savings Needed
To achieve your luxury car savings goal, consider investing your money. Assuming a 5% annual rate of return (or 0.004167 monthly rate), here are the estimated monthly savings needed for different luxury car price points in five years:
- For a $60,000 luxury car: $1,020 per month
- For an $80,000 luxury car: $1,362 per month
- For a $100,000 luxury car: $1,703 per month
Additional Considerations
- Build a budget with a wide contingency as future economic conditions are uncertain.
- Consider potential impacts of tariff changes on car prices and interest rates.
- Always save more than you think necessary for future purchases.
By understanding these factors and planning accordingly, you can better prepare for your future luxury car purchase.
