- The average MSRP on a new car is approaching a record
- But transaction prices remain relatively flat
- That likely means automakers and dealers are trying to keep tariff costs from hitting you
The average new car for sale in America carried a sticker price of $51,124 in June, the second-highest figure on record. Only last December surpassed it, when manufacturers’ suggested retail prices (MSRPs) hit $51,990.
Few car buyers pay the MSRP on a new car. The average sale price last month was $48,907. Transaction prices have remained surprisingly stable despite hefty tariffs on new cars and car parts.
But the price on the window has risen for three straight months. That likely indicates a record in the near future. MSRPs typically peak in December.
The numbers suggest that automakers are seeing their own costs rise, but are doing all they can to prevent that price increase from reaching car shoppers.
Slowing Sales, Climbing Discounts
- New car sales slowed last month
- Incentives rose, keeping transaction prices from rising like MSRPs
New car sales are slowing. Economists measure them with a tool called seasonally adjusted annual rate (SAAR), which measures how many cars Americans would buy in a year if today’s sales rate lasted all year. It fell to 15.3 million in June after peaking at 17.8 million in March.
With sales slowing, dealers are ramping up discounts to try to lure in shoppers. Incentives comprised 6.9% of the average sale last month, up 0.1% from May. A year ago, incentives were 6.5% of the average sale.
The Squeeze Can’t Last Forever
- Factories and dealers can’t keep paying higher costs and accepting lower prices
“The months ahead are shaping up to be ‘the big squeeze,’ as the real headline this summer will be the growing disconnect between rising costs for automakers and dealers and relatively flat consumer prices,” predicts Erin Keating, executive analyst for Kelley Blue Book parent company Cox Automotive.
“As average MSRPs continue to climb, the modest increase in transaction prices suggests the businesses are absorbing more of the burden and not passing the added costs to consumers — something that will impact profitability if the trend persists.”