New vehicle prices in the U.S. have been on a downward trend for the past 10 months, with July marking the 10th consecutive month of year-over-year declines. According to Kelley Blue Book, the average transaction price for a new vehicle in July was $48,401, slightly lower than June and $106 lower than the previous year. This shift is largely attributed to increased inventory levels and higher incentives, which have favored buyers in the market. However, high loan rates and tight credit conditions continue to be obstacles, keeping industry sales below their full potential.
The U.S. auto market currently boasts healthy inventory levels, with 2.91 million vehicles available at the start of July—a 52% increase compared to last year, according to Cox Automotive’s vAuto Live Market View. This surplus of supply has helped to keep pressure on vehicle prices. However, persistently high auto loan rates are causing many consumers to either delay purchases or seek more affordable options. The Mitsubishi Mirage, set to be discontinued at the end of the year, was the only new vehicle in July with an ATP below $20,000.
Popular segments like Compact and Subcompact SUVs remain attractive, accounting for about 25% of sales in July. However, their ATPs—$36,621 and $29,827, respectively—are well below the industry average. These segments also feature incentive levels above the industry norm. On the other hand, expensive full-size pickup trucks, which represented 14% of U.S. sales last month, continue to drive the industry’s ATP higher, with an average price of $65,713.
The two best-selling vehicles in July were full-size trucks: the Ford F-Series and the Chevrolet Silverado, both with high ATPs. Additionally, two all-electric pickups, the GMC Hummer EV Pickup and the Tesla Cybertruck, sold for over $100,000, with the Cybertruck becoming the best-selling vehicle in the U.S. priced above this threshold.
In July, average incentives increased to 7.0% of the ATP—$3,383—up from 6.4% in June, marking the most generous incentive level in 2024. Incentives are now up 59.1% compared to July 2023, with new-vehicle incentives at their highest point in over three years. Infiniti, Volkswagen, Audi, and Nissan led volume automakers in incentive spending. Meanwhile, the core Stellantis brands—Chrysler, Dodge, Jeep, and Ram—offered incentives below the industry average despite high inventory levels.
EV transaction prices in July averaged $56,520, a slight increase from June but down 1.5% year over year. The average incentive for a new EV reached over 12% of the transaction price, the highest in over three years and nearly double the 6.0% incentive level seen in July 2023. EV incentives in July were 73% higher than the industry average, with Tesla prices contributing to the upward trend. Tesla’s ATP in July was $59,593, an 11% increase from a year ago, driven by the success of the Cybertruck and consistent price hikes for the Model 3 and Model Y.
Despite the positive impact of higher incentives, the auto market’s full potential remains constrained by high interest rates and tighter credit conditions. Experts suggest that for the market to thrive, interest rates must decrease and credit conditions must ease.