New data from Kelley Blue Book backs up what Car Pro Show host Jerry Reynolds has been telling listeners about new-vehicle incentives. They're going up, fantastic news for those in the market for new wheels. KBB data indicates that in July, new-vehicle incentives reached 7.0% of the transaction price, the highest level in more than three years and nearly 60% above levels recorded one year ago.
New-vehicle prices were also lower year over year for the 10th consecutive month in July, according to KBB's numbers analysis. Researchers say higher inventory levels and higher incentives have shifted the U.S. auto market to favor buyers, but high loan rates and tight credit conditions continue to hold industry sales below potential.
KBB records July's new-vehicle average transaction price (ATP) as $48,401. New-vehicle prices in July were mostly unchanged from the revised-lower June ATP of $48,424 (lower by $23) and last year ($106). New-vehicle ATPs were lower in July by 3.1% from the peak in December 2022 at $49,929.
KBB says healthy inventory levels – 2.91 million vehicles at the start of July, higher by 52% year over year, according to Cox Automotive's vAuto Live Market View – continue to keep downward pressure on vehicle prices. But researchers cite stubbornly high auto loan rates, which make monthly payments higher, as leading many consumers to stay on the sidelines or hunt for affordable options. KBB says only one new vehicle in July posted an ATP below $20,000, the Mitsubishi Mirage, and it will be discontinued at the end of the year.
Still, many popular U.S. market vehicles continue to transact for well below the industry's ATP. For example:
It comes as no surprise that expensive, full-size pickup trucks continue pushing the industry's ATP higher:
The two best-selling vehicles in the U.S. in July were full-size trucks: the Ford F-series and Chevrolet Silverado, which KBB says the Chevrolet Rado will possibly replace in model year 2026.
KBB says the Chevrolet Rado will possibly replace in model year 2026.
In July, two EV pickups transacted for over $100,000:
"The thing about the U.S. is its diversity, and that goes for the U.S. auto market as well," said Erin Keating, executive analyst at Cox Automotive. "There are many expensive, high-profile vehicles out there, but consumers have many good options priced well below industry average. We hear this from the large dealers all the time: No matter the budget, chances are we can make something work. This is particularly true where inventory is higher, and incentives are
Now a closer look at KBB's July incentive data. Average incentives rose to 7.0% of the average transaction price – $3,383 – up from 6.4% in June and the most generous level seen in 2024. KBB says incentives are now higher by 59.1% compared to one year ago, when the average incentive package was 4.4% of ATP in July 2023. New-vehicle incentives in July were at the highest point in more than three years.
Nearly every major brand – except for Ram – had higher incentive levels year over year in July, with the highest incentive spend among volume automakers at INFINITI Volkswagen, Audi and Nissan. KBB says surprisingly, despite industry-leading inventory levels, incentive spending at the core Stellantis brands – Chrysler, Dodge, Jeep and Ram – remains below the industry average.
"Not every brand is seeing sky-high days' supply, but, in most cases, where there is excess, incentives are climbing," added Keating. "The higher incentives are helping consumers, but stubbornly high interest rates and tighter credit conditions continue to make affordability challenging. If we are going to see the market live up to its potential, we will need to see rates lower, and credit loosen."
According to KBB data, the average transaction price for an all-electric vehicle in July was $56,520. That's higher than in June but down 1.5% year over year. The average incentive package offered with a new EV in July was over 12% of the transaction price, the highest level in more than three years and roughly twice the level seen in July 2023 when typical incentive packages were equal to 6.0% of ATP. EV incentives in July were 73% higher than the industry average.
KBB says that average transaction prices at Tesla continue to move higher after dropping to near the industry average in December 2023. In July, Tesla ATPs were $59,593, up 11% from one year ago and at the highest point since February 2023. KBB says the success of the popular new Cybertruck is likely pulling Tesla prices higher, although the volume products, the Model 3 and Model Y, have seen prices rise consistently through the year. In July, the ATP for the Model Y was $52,055, up 5% from January, while the Model 3 was $53,878, up a remarkable 30% from January when Model 3 ATPs were $41,531. The Model Y and the Model 3 are the top-selling EVs in the U.S. market.
Click here for KBB's downloadable data tables.
Source: Kelley Blue Book Press Release.
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