Between rising prices courtesy of tariffs and other costs, interest rates still higher than consumers are used to and shrinking inventories, finding a good deal on a new vehicle is tougher than ever.
New vehicle prices are on the rise as inventories shrink and incentives decline.
Automakers have been moving lots of metals the past few months, which might suggest there are plenty of good deals to be had. And while there’s always something out there that’s easier on your bank account, it’s the push to avoid tariff “premiums” on new vehicles that’s been the big driver of strong numbers.
Big sales results in March and April are contributing factors to what’s likely to be a tougher market in May and June. In fact, according to Cox Automotive, retail sales are already seeing a decline. However, they’re still on track to outpace year-ago numbers.
Buyer headwinds
April saw a surge in new vehicle purchases but the market is now starting to slide as tariffs go into effect.
Although some shoppers are still looking to get into a new vehicle before tariffs become pervasive, the market is already shifting. Low-interest rate deals have decreased by more than 7 percentage points compared to this time last year, Cox analysts noted, adding 0% interest loans are also on the decline.
Because of this, it’s more expensive to buy a new vehicle these days, and this trend may continue going forward. While used vehicle loan rates have slightly decreased to 14.13%, new vehicle loan rates have increased to 9.64%, Cox noted.
Additionally, there simply aren’t as many incentives being offered by automakers. Since February, incentives are down; vehicle prices are up. Manufacturer incentives declined by 2.1% month over month to $3,278, which was up 6.7% year over year.
The result? The average transaction price of a new vehicle in April increased by 2.5% from March to $48,699, which was up 1.1% year over year.
More Industry News
- U.S. Car Sales Soar in March as Buyers Raced to Beat Trump Tariffs
- GM Reports Q1 Earnings
- Automakers Find Ways to Offset Tariffs
Complicating factors
Buyers raced to showrooms in April to beat tariff hikes…but prices were already rising.
Also finding the vehicle you want may be difficult as the supply of new vehicles remains tight. The rush to beat tariff prices, resulted in hundreds of thousands of “pull-ahead” new vehicle sales, according to ZeroSum, a market intelligence service.
“While the tariff picture is still coming into focus, the 341,000 pull-ahead sales that have occurred in the past two months will almost inevitably act as a drag on upcoming sales particularly if the expected price increases that drove those purchases in the first place become the new reality in the marketplace,” said Josh Stoll, vice president of Dealer Success at ZeroSum.
Vehicle prices continued a steady climb in April, with Average Marketed Price for new vehicles up $1,200 from February levels, according to ZeroSum.
The average new vehicle price moved above $50,000 on April 14 for the first time since December 2024 and remained above that milestone for the remainder of the month. Average Marketed Used vehicle prices leveled off month-over-month at $26,200 but are up $900 since February.
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