Average incentive spend topped $3,500 in September, a 7.3% jump from the previous year, as OEMs pushed to get buyers into the market.
Driving the news: JD Power’s U.S. Automotive Forecast showed the average incentive for the month was $3,574, up $200 vs. August.
The incentive for ICE and hybrids increased year over year from $797 per unit to $3,319.
Meanwhile, EV incentives dropped 21.7% or $2,450, to $8,829 per car.
Tyson Jominy, SVP for OEM customer success at JD Power, said part of the incentive growth is due to increased borrowing costs.
“What's even more remarkable is the nominal growth, 7% compared to a year ago when we were trying to get rid of all those EVs and automakers spending $11- and $12-grand per EV,” Jominy told CDG News. “So, if we were to just isolate it to strictly ICE incentive spend, it actually looks a lot worse than that… We're spending some real dollars right now to keep the sales pace we're seeing.”
Sales pace down slightly: For September, JD Power expects the seasonally adjusted average rate to finish at 16.1 million.
That figure is down slightly from September 2025’s 16.3 million, which was boosted by EV sales that happened before the federal Clean Vehicle tax credit of up to $7,500 expired on Sept. 30, 2025.
With a later Labor Day weekend figured into September’s numbers this year, total sales were slightly ahead of last year (2.6%) at 1.3 million and retail sales down just 0.2%, at 1.1 million.
With the credit loss, the EV sector's share of sales fell 4.6 percentage points year-over-year.
Hybrid sales picked up the pace, growing 4.8 percentage points to an 18.2% share.
“If you just take September alone, we had two opposite forces working against us,” Jominy explained. “Last September we had all the pull ahead from the federal tax credit expiring, so we had that volume in the comp… But this year, due to a quirk in the way industry reports sales, we had Labor Day pushed into this year where it wasn't last year… It was a head-to-head of Labor Day versus EV sales pull-ahead. And it was more or less a wash.”
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Record payments: The average payment grew to a September record of $821, a 3.2% jump from last year and another $9 higher than the August record set last month.
That average payment reflected a 0.7% increase in the transaction price to $45,915 and a rate of 6.66% before any impact from the Federal Reserve raising rates.
The share of loans at 84 months or longer reached 13.9%, an increase of 2% from last year, and the percentage of trade-ins with negative equity hit 29.4%.
“We're still seeing monthly payments up over $800. And so consumers coming out of a monthly payment that's more like $600 a month will be kinda shocked at what they see in the market,” Jimony said.
“When you're a consumer, and you're in the F&I office, by that point, you've already picked your car; your credit is what it is, you really only have one lever at that point, and that's term,” he added. “That's really the only thing that a consumer can do to affect their monthly payment at that point. So we do see consumers continuing to go into longer-term loans.”
Bottom line: The market is projected to bring in an additional $3 billion in September versus last year, with prices rising slightly and volume remaining steady.
“We're seeing consumers are still spending record amounts on new vehicle purchases. There's reasons to be optimistic,” Jominy said. “It seems like underlying demand remains strong. While incentives have gone up here, inventory has been flat at an industry level, which means we aren't seeing a lot of distress incentives out there…These are mid-cycle dynamics.”
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