The Shocking Truth About New Car Prices Right Now

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20 hours ago

The Shocking Truth About New Car Prices Right Now originally appeared on Autoblog.
Kelley Blue Book data drawn from auto dealerships has reflected that new car prices remained steady in May despite some manufacturers raising costs due to tariffs. Additionally, new electric vehicle (EV) sales were mixed by brand, even with significantly more incentives. The average manufacturer's suggested retail price (MSRP) for a new car in May was $50,968—a slight increase from April but the highest figure in 2025 so far and a 2.1% year-over-year increase. December 2024 saw MSRPs peak at $51,990.
New-vehicle Average Transaction Prices (ATP) were almost identical to April's $48,811 at $48,799 and have increased by 1% compared to last year. ATP on compact and mid-size SUV segments remained largely the same, and with the pre-tariff shopping rush winding down, dealership sales dropped to 15.6 million compared to April's 17.3 million. Sports cars, luxury cars, and luxury subcompact SUVs had the most significant price increases in May, whereas costs for popular small/mid-size pickup trucks rose 0.9% month-over-month, reaching $42,062.
Incentives were the least clear trend within May's new vehicle sales data. New car incentives increased slightly from 6.7% of ATP to 6.8% ($3,297)—the same amount as May's year-over-year rise. However, several automakers lowered incentive spending last month, including Volkswagen, Mazda, Land Rover, Volvo, BMW, Chrysler, Jeep, and Ram. Still, a few manufacturers, such as Tesla, Toyota, and Nissan, vastly increased May incentive spending, with Toyota's rising by 20%. While Toyota's incentive spending increase is notable, its 4.1% of ATP remains below the industry's 6.8% incentive rate in May. Compact and mid-size SUV segments were among the classes with the least changed incentives, but the average EV incentive package increased from 11.6% month-over-month to 14.2% of ATP ($8,225), marking the highest level since 2018. Tesla ATP declined 1.5% to $55,277. May was General Motors' second-best month ever for EV sales, and Hyundai's electric Ioniq 6 sedan saw a 9% year-over-year delivery increase. Automakers like Ford had their May EV sales decline by 25%.
'While tariff policy is adding uncertainty to the new-vehicle market, prices are holding remarkably steady, a reminder that auto industry change is often slow. Many automakers are keeping true to a promise to hold the line on pricing, at least in the near term. We are still expecting prices to move higher through the summer as the inflationary impact of tariffs begins to hit. Right now, we believe dealer profitability is being squeezed, as costs on many products are going up, but raising retail prices in this environment is a real challenge,' said Erin Keating, Executive Analyst at Cox Automotive.
U.S. consumers rushed to dealerships in March and April, hoping to beat tariff price adjustments, but even in May, shoppers could still acquire comparable deals. Automakers like Ford have extended their employee pricing promotion through the 4th of July weekend, and Tesla ATP has declined 1.5%. Some consumers realized they had time to beat tariff pricing, as dealership sales were up 1.4% year-over-year in May despite a slowing sales pace, according to MarkLines data. Still, CBT News notes that U.S. auto imports fell 72% in May, so while dramatic price increases won't happen as quickly as some might have imagined, it could become harder for drivers to find the exact model and trim they want.
The Shocking Truth About New Car Prices Right Now first appeared on Autoblog on Jun 12, 2025
This story was originally reported by Autoblog on Jun 12, 2025, where it first appeared.