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Kelley Blue Book Report: New-Vehicle Prices Hold Steady in May, As Automakers and Dealers Work To Offset Tariff-Driven Cost Increases

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ATLANTA, June 10, 2025 ~ In the latest report from Cox Automotive's Kelley Blue Book, it has been revealed that the average new-vehicle transaction price (ATP) in May remained steady compared to April. The report also highlighted a slowdown in new vehicle sales pace, with key takeaways including an increase in incentives and a majority of automakers reducing their incentive spending.

According to the data, the average new-vehicle ATP for May was $48,799, which is almost unchanged from April's revised ATP of $48,811. Compared to May 2024, there was a 1.0% increase in new-vehicle transaction prices. However, the sales pace for new vehicles saw a notable decline in May, dropping from 17.3 million in April to 15.6 million. This decrease was reflected in an increase in incentives from 6.7% of ATP in April to 6.8% in May ($3,297). It is worth noting that this is still lower than the industry average of 6.7% of ATP seen a year ago.

The report also highlighted that a majority of automakers reduced their incentive spending last month. Brands such as Volkswagen, Mazda, Land Rover, Volvo and BMW all decreased their incentive spending by more than 10%. Incentives were also notably lower for Chrysler, Jeep and Ram compared to the previous month. On the other hand, Tesla, Toyota and Nissan increased their incentive spending significantly in May. Despite an increase of over 20%, Toyota's incentive spending remains well below the industry average at approximately 4.1% of ATP.

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The average manufacturer's suggested retail price (MSRP) for a new vehicle saw an increase in May at $50,968 compared to $50,774 in April – marking the highest point so far this year. Year over year, there was a 2.1% increase in average MSRP for new vehicles, which is lower than the long-term average increase of 3.5%. The peak for average new-vehicle MSRP was seen in December 2024 at $51,990.

In terms of specific vehicle segments, transaction prices remained steady for popular and best-selling vehicles. The Compact SUV and Mid-size SUV segments, which are the two largest segments in the U.S., saw no significant changes in prices or incentives. The average price paid for a Compact SUV in May was $36,515, while incentive spending increased slightly to 8.0% of ATP from 7.9% in April.

However, there were some segments that saw an increase in prices month over month. These include Sports Cars, Luxury Cars and Luxury Subcompact SUVs. Popular Small/Mid-Size Pickup Trucks also saw a slight increase in prices by 0.9% to $42,062, while incentives decreased from 6.0% of ATP in April to 5.9% in May.

Executive Analyst at Cox Automotive, Erin Keating commented on the current market situation saying that while tariff policy has added uncertainty to the new-vehicle market, prices have remained stable – indicating that change within the auto industry is often slow. She also noted that many automakers are keeping their promise to hold pricing steady for now but expects prices to rise as the impact of tariffs starts to take effect.

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The report also highlighted a positive trend for electric vehicles (EVs). The initial estimate for new EV ATP in May was $57,734 – down from a revised $59,123 in April and lower year over year by 1.1%. Incentives for EVs saw a significant jump from 11.6% of ATP in April to 14.2% of ATP ($8,225) in May – more than double the industry-wide incentives and higher than last year's level of 12%. This marks the highest level of incentives for EVs in the modern era of EV sales, which began in 2018 when EVs achieved more than 1% of total market share.

Tesla, one of the leading brands in the EV market, saw a decline in average transaction prices for May. The prices fell by 1.5% to $55,277 and were lower year over year by 2.8%. While Model 3 and Cybertruck saw a modest increase in prices month over month, all other Tesla products showed a decline. The best-selling Model Y had an average transaction price of $53,895 in May – a decrease of 2.9% from April. Despite this decline, the Model Y remains the top-selling EV in the U.S.

In conclusion, while there are some fluctuations in prices and incentives across different vehicle segments and brands, overall the market has remained stable. However, with the impact of tariffs looming and rising costs for automakers, it is expected that prices will continue to rise in the coming months – posing a challenge for dealerships to maintain profitability while keeping up with market demands.
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