Auto Dealerships NAICS 441110

Aug 12, 2025 - New Car Prices Hold Steady as Incentives Rise

• The average new car price held steady in June 2025 at $48,841, according to Kelly Blue Book, which is 1.5% higher than a year ago as dealerships and automakers boost incentives to keep sales volume high and balance out tariffs. Incentives (discounts automakers give to dealers) made up 7.3% of the average purchase in June, but experts don’t see discounts as a long term solution and expect the industry to eventually pass rising costs to consumers. Luxury brands have seen prices rise the fastest (per Cox Automotive) at around twice the industry average. Those brands (Cadillac, Mercedes, Porsche, among others) are keeping the new car industry afloat from high-income earners who are unswayed by the increases amid pent-up demand. EVs bucked the trend and saw prices fall 4.2% year over year in June with the government tax credits to buy those cars expiring this year.
• The seesawing automobile market continues with consumer intent to buy a car shifting almost as often as the 25% US tariffs on imported automobiles. Tariffs are driving up auto prices (Ford, Subaru, and Toyota have all boosted prices, citing tariffs) and a survey from Santander Holdings USA shows a renewed rush to buy now before prices climb higher. About 55% of consumers will buy a new car in the next year (up from 47% in Q1 2025). One in five US households sped up big purchases in Q2, with 41% of those transactions being a car. Half of consumers are also likely to take out an auto loan, while 42% will buy a used car, illustrating how tariffs have downstream effects. After a surge of auto buying in the spring, more consumers (42%) expect the situation to be long-term and will buy a car in the next three months.

• New car sales cooled to their slowest pace of the year in June after a rush by buyers in the early part of the year as they tried to get ahead of steep tariffs on foreign automobiles. Car sales in March and April soared with customers buying an extra 173,000 vehicles before tariffs kicked in, according to JD Power. Industry analysts anticipate the sluggish performance to continue throughout the year as buyers face rising car prices, high interest rates, and a dearth of inventory for new cars and trucks. With the average new car price hitting $46,000 (a $1,400 bump from the previous year), customers are also drifting away from luxury or niche models to compensate. Brands such as Kia and Ford saw sales boosts earlier in the year as a result. The industry expects manufacturers to increasingly pass tariff costs onto the customer through higher prices.
• Some auto dealerships are resorting to “stealth fees” to avoid raising sticker prices for new cars due to the 25% tariffs on foreign automobiles and auto parts. To avoid a backlash from consumers and politicians, instead of outright raising prices on new cars, dealers are charging more in indirect ways including slashing rebates, limiting cheap financing agreements, boosting delivery charges, and charging more for cars already on the lot. According to Kelly Blue Book, average new car prices rose 2.5% in April to $48,600, a five year high. Incentives, which could drop a new car price by as much as 10%, fell to 6.7% in the same month. Zero-percent financing deals also fell to their lowest rate in six years. Taken together, stealth fees can add thousands of dollars to a new car price while leaving the sticker price unaffected.