New vehicle prices remained relatively steady last month–as the industry braces for higher costs with 2026 model year vehicles now rolling into dealerships.
The details: The average transaction price (ATP) for new vehicles in July was on par with June, with only a slight dip month over month, and accelerated incentive spending helping to ramp up sales volumes, according to Kelley Blue Book estimates.
The new vehicle ATP was $48,841 in July, down 0.1% from the revised lower June ATP of $48,900—but higher year over year by 1.5%, the largest annual gain of 2025, while still below long-term average gains.
Incentives surged 7.3% of ATP last month from an upwardly revised 7.0% of ATP in June, equal to $3,553—the highest point of 2025 and higher than year-ago levels, when average incentive spending was 7.0% of ATP.
New vehicle MSRPs were lower in July by 0.3% compared to June, but up 2.4% year-over-year—suggesting that manufacturer costs continue to increase at a quicker pace than consumer retail prices (ATPs).
What they’re saying: “In the face of rising prices, it is becoming more evident that the new vehicle market is being supported by pent-up demand driven largely by high-net-worth households. These buyers are benefiting from the wealth effect of a healthy stock market and solid wage growth since the pandemic. At the same time, automakers are providing healthy incentives to keep sales flowing,” said Erin Keating, Executive Analyst for Cox Automotive.
Why it matters: New vehicle prices are holding steady for now, but higher manufacturing costs are building into 2026 models, with automakers leaning on record-high incentives to keep sales moving—signaling that price pressures may rise later even if short-term buyer deals improve.
Between the lines: Car buyers in the luxury lane were hit with higher vehicle prices in July, as some import brands looked to navigate the tariffs and other premium brands repositioned the product portfolios, seeking higher revenue—while EV shoppers saw lower prices, with higher incentives to help drum up sales.
Cadillac, Land Rover, and Infiniti posted double-digit ATP gains compared to 2024—with Mercedes, Porsche, and Lincoln also seeing ATP increases more than twice the industry average.
The ATP for a new EV was $55,689 in July, down by 2.2% from June and 4.2% lower year over year—with the average incentive package for an EV in July hitting a record 17.5% of ATP, which is more than 40% higher year over year.
“The urgency created by the administration’s decision to sunset government-backed, IRA-era EV incentives was expected to create serious demand for EVs in the short term. If last month is any measure: Mission Accomplished. July sales were near an all-time monthly record. At this pace, Q3 will be the best ever and then some, as buyers jump in before the big incentives dry up,” added Stephanie Valdez Streaty, Senior Analyst for Cox Automotive.
Bottom line: New vehicle sales volumes were strong in July thanks to elevated incentives and luxury buyers willing to pay higher vehicle prices. However, rising manufacturing costs for 2026 models could drive even higher price increases in some segments, while EVs could see one of their strongest Q3 sales periods to date, as buyers race to capture expiring federal incentives.
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