Cars are expensive, but only to the degree that pretty much everything is expensive here. Cars aren't *especially* expensive compared to anything else, as far as I can tell.
Here is a Ford dealer here in ReykjavÃk where you can see prices on current used and new vehicles.
Like essentially every web site in the country, it's only in Icelandic, but you can basically figure it out I think. Like most places, expect to pay a bit less than the sticker price.