In July, the U.S. average transaction price (ATP) for new vehicles edged down slightly to $48,841, a 0.1% drop from the revised June figure of $48,900, though it marked a 1.5% increase year over year — the strongest annual gain of 2025 so far, according to new data from Kelley Blue Book, a Cox Automotive company.
Meanwhile, incentive spending surged to 7.3% of ATP—the highest level seen in 2025 and up from an adjusted 7.0% in June ($3,553.) Despite a small 0.3% decline in MSRPs compared to June, they remain 2.4% higher than a year ago, signaling that manufacturers continue to absorb rising costs rather than passing them directly to consumers.
“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,” said Erin Keating, executive analyst at Cox Automotive. “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. Prices are trending higher, but just as we are seeing in the broader retail markets, there’s sufficient demand and generous incentives out there, and that’s driving the market,” Keating added.
The July spike in incentives also notably applied to electric vehicles (EVs). The ATP for a new EV dropped to $55,689, 2.2% below June’s $56,915, and down 4.2% from a year ago. EV incentives reached a record 17.5% of ATP, up more than 40% from the prior year, as dealers rushed to clear inventory ahead of the early October sunset of federal tax credits.
Though EV sales rose by an estimated 20% year over year in July — surpassing 130,000 units and becoming the second highest monthly total on record — many of these sales likely involved pricing concessions.
“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,” said Stephanie Valdez Streaty, senior analyst at Cox Automotive. “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.”
