New Car Prices Edge Higher, but Tariff Impact Remains Limited

Credit access for purchasing vehicles improved on a monthly basis.

A sign in front of a CarMax dealership in Santa Rosa, Calif., on April 10, 2025. Justin Sullivan/Getty Images

The cost of buying a new car in the United States rose in June, according to a July 14 statement from Kelley Blue Book.

The average transaction price (ATP) of a new vehicle in June was $48,907, 0.4 percent higher than the downwardly revised May ATP of $48,717, according to the report. The June numbers registered an annual increase of 1.2 percent, the largest year-over-year gain in 2025.

The report noted the increase was relatively mild and below the long-term average.

“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,” said Erin Keating, executive analyst of Cox Automotive, parent company of Kelley Blue Book.

“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.”

MSRPs refer to manufacturer’s suggested retail prices.

The monthly sales pace for the seasonally adjusted number of cars sold in a year dropped slightly in June to 15.3 million units, compared to May’s 15.6 million and April’s 17.3 million.

According to the report, monthly inventory levels climbed in June.

A report from Cox published on July 15 states that new-vehicle affordability has been affected by trade tariffs.

“Even with some trade relief, the added cost—up to $5,700 per imported vehicle—hits the most affordable models hardest, limiting options for price-sensitive buyers,” said Jonathan Smoke, Cox Automotive’s chief economist.

“We are in the early stages of seeing how manufacturers deal with these added costs, but we do not believe that the American consumer can absorb it all.”

The estimated average auto loan rate increased in June by 5 basis points to 9.94 percent, according to the report. The number was 75 basis points lower than a year prior but at the highest level since December 2024.

The Trump administration has imposed a 25 percent tariff on vehicle imports in a bid to protect the U.S. auto manufacturing sector. President Donald Trump later signed an order preventing overlapping duties from being charged on the same vehicle to provide relief for automakers.

Despite expert predictions that there would be a steady and significant increase in vehicle prices because of the trade tariffs, that upward momentum has not yet materialized. Prices held steady in May after an initial increase in April, when Trump announced the tariffs.

Inflation and Credit Access

According to the latest data released by the Bureau of Labor Statistics on July 16, the producer price index, a leading indicator of consumer inflation, remained flat for the month of June.

While goods inflation rose by 0.3 percent, the indexes for automobiles and automobile parts retailing decreased, according to the report.

The June inflation numbers suggest a low probability of tariffs raising overall prices in the coming months.

According to the University of Michigan’s preliminary July survey, the year-ahead inflation expectations fell for a second straight month, plunging from 5 percent in June to 4.4 percent this month.

“Long-run inflation expectations receded for the third consecutive month, falling back from 4.0 percent in June to 3.6 percent in July. Both readings are the lowest since February 2025,” reads the survey report published on July 18.

As for used vehicles, wholesale prices decreased in the first half of July, according to a July 17 Cox report, with the average price dropping by 0.7 percent in the first 15 days of July from June.

Auto credit access improved in June.

The approval rate for auto loans increased by 70 basis points in June, showing that lenders were more willing to approve applications because of an improvement in overall market conditions.

The biggest gains were seen in the used-vehicle category, reflecting a loosening of credit requirements by banks and auto-focused finance companies.