Dealers enter August with strong momentum as July delivers the highest incentive spend of 2025 and steady transaction prices that engage buyers. Pent-up demand – particularly from high-net-worth households – combined with targeted OEM incentives, gives retailers opportunities to move both luxury and electric-vehicle inventory, while brands like Jeep offer fresh value plays.
The average transaction price (ATP) for a new vehicle in July was $48,841, a slight 0.1% dip from June’s revised $48,900 but up 1.5% year over year – the most significant annual gain so far in 2025. Incentives hit 7.3% of ATP, or $3,553, marking the highest average incentive spend of the year and topping July 2024 levels.
"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," Erin Keating, executive analyst for Cox Automotive, says in a news release. "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."
Luxury Brands Lead Price Gains – Except Acura
Many luxury brands saw notably higher year-over-year ATPs in July, driven by tariff impacts and product repositioning. Cadillac, Land Rover and Infiniti posted double-digit ATP increases, while Mercedes, Porsche and Lincoln saw gains more than double the industry average. Audi, BMW and Genesis posted increases closer to the overall market’s 1.5% gain. Acura bucked the trend with lower prices.
Jeep Stands Out for Price Drop
Among volume brands, Jeep led ATP declines, with the brand’s average price falling nearly 12% year over year to $47,275 – the lowest since fall 2021. Jeep incentives reached 8.1% of ATP, up sharply from 5.5% in July 2024. Still, the brand’s sales jumped 27% year over year in July.
EV Prices Fall, Incentives Surge Ahead of Government Incentive Sunset
The average price of a new EV dropped to $55,689 in July, down 2.2% from June and 4.2% from a year ago. Tesla’s ATP fell 9.1% year-over-year to $52,949, helped by a higher mix of Model 3 and Model Y sales. Tesla incentives also rose in July.
Overall EV incentives hit 17.5% of ATP, the highest in modern EV sales history – more than 40% higher than last year – as dealers and automakers looked to clear inventory before the Oct. 1 sunset of Inflation Reduction Act-era federal EV incentives.
"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," says Stephanie Valdez Streaty, senior analyst for Cox. "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."
Preliminary estimates show EV sales topping 130,000 units in July, up 20% year over year and the second-best month on record.
But Eric Stradley, president of Caribou, an auto financing firm headquartered in Denver, says dealers should note that only about 3% of EV buyers qualify for federal tax deductions that will sunset after Sept. 30.
That news could help buyers make the leap to EVs, which traditionally have the same interest rates as internal-combustion-engine vehicles.
“Frankly, [we were] a little disappointed… the coverage for the tax deduction was only for new vehicles, which is a relatively small share of both what consumers buy and also what dealers want to sell,” Stradley tells WardsAuto, citing restrictions that include U.S. assembly requirements and income phase-outs. “The end result is 97% of people in the country who are buying an (EV) car for the first time, new to them, just are not going to benefit.”
