New-vehicle prices stayed mostly flat in March, but dealers should brace for what’s next: tariff-driven price hikes and continued upward pressure on battery-electric vehicle pricing.
According to Cox Automotive’s Kelley Blue Book, the average transaction price (ATP) for a new vehicle in March was $47,462, down slightly from February’s revised ATP of $47,577. Year over year that marks less than a 1% increase. Despite the stable pricing, industry watchers warn that the landscape will shift dramatically.
“All signs point to higher prices this summer,” says Erin Keating, executive analyst at Cox Automotive. “There is no way around it. Tariffs are going to push new-vehicle prices higher in the U.S.”
Tariff Fallout: Sub-$30K Models in the Crosshairs
Only 26 models carried ATPs under $30,000 in March – just 14% of total U.S. new-vehicle sales – and many of them are among the most vulnerable to the new 25% tariffs on imported vehicles. These include popular, budget-friendly models like the Chevrolet Trax, Honda HR-V, Kia Soul and Mazda3, all assembled outside the U.S.
Also impacted: the discontinued Mitsubishi Mirage, long the only vehicle with an ATP under $20,000. Dealers with remaining low-cost, pre-tariff inventory may see increased short-term demand, but restocking equivalent vehicles will come at a premium.
Keating estimates vehicles hit by the tariffs could see ATP increases between 10% and 15%. Even non-tariffed models may be affected, with Cox projecting a minimum 5% bump due to market pressure.
March Sales Surge as Buyers Beat the Hike
As previously reported in WardsAuto, new-vehicle sales surged in March due to consumers wanting to buy before tariffs were in place. Kelley Blue Book estimates U.S. dealers moved 1.59 million units – the strongest monthly sales volume in nearly four years and a 30% jump over February.
Luxury and volume brands alike saw mixed pricing trends. Infiniti and Porsche led with ATP increases of 18.9% and 11.5%, respectively, while Jeep (-10.6%), Ram (-5.8%) and Mercedes-Benz (-4.7%) posted year-over-year declines.
Incentives Hold, but Inventory Will Be Key
Incentives in March held steady at 7.0% of ATP, equal to February and slightly above the 6.7% average from a year ago. Luxury cars, compact SUVs and full-size pickups offered the highest incentive levels. But shoppers hunting for deals found less value in categories like small/midsize pickups and full-size SUVs, where incentives hovered as low as 2.6% of ATP.
As dealers head into spring, much will hinge on how long “pre-tariff” inventory lasts – and how manufacturers adjust pricing on incoming models.
BEV Prices Continue to Climb as Tesla Stumbles
Electric vehicle ATPs continued their climb in March, averaging $59,205 – up 7% year over year and 25% higher than the industry average. While still well above internal combustion engine vehicles, BEV incentives piped to 13.3% of ATP from February’s 14.3%.
Tesla remains a key part of the BEV price puzzle. Its March ATP rose to $54,582, with Model 3 and Model Y prices climbing both year over year and month over month. However, Tesla’s Q1 sales fell more than 8% from the same period last year, signaling a continued decline from its 2023 peak.
What This Means for Dealers
Dealers should prepare for uneven impacts from tariffs depending on their brand mix and inventory. Those with strong supplies of affordable, import-heavy models may see a short-term sales burst, followed by a potential demand slowdown if prices spike. Meanwhile, the widening price gap between BEVs and ICEs could complicate customer conversations, especially for buyers weighing monthly payment options.
Now more than ever, clear communication on inventory status, price forecasts and available incentives will be critical for dealer-customer trust.
