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Kelley Blue Book Reports Stable New-Vehicle Prices Amid Sales Surge Ahead of Expected Tariffs

Kelley Blue Book, a leading automotive resource, has released its monthly average transaction price (ATP) report, highlighting a steady yet cautious landscape in new-vehicle pricing for March 2025. The average price for new vehicles held relatively stable at $47,462, slightly down from January’s revised ATP of $47,577. Year-on-year, this represents an increase of less than 1%, indicating a consistent pricing trend amidst fluctuating market conditions.

Monthly Trends and Consumer Behavior

Throughout March, sales incentives remained unchanged from February at 7.0% of ATP, although they reflected a 5% increase compared to the same month last year when incentives were at 6.7% of ATP. The average new-vehicle incentive package slipped slightly to $3,339. Notably, transportation prices dipped for vehicles priced under $30,000, which only made up 14% of total U.S. sales. This category is particularly vulnerable as many of these vehicles are manufactured abroad and could incur significant tariffs under the new policy.

The potential tariff implications are driving consumer behavior, with many buyers rushing to purchase vehicles in March before price increases are implemented. Kelley Blue Book estimates that 1.59 million new vehicles were sold during the month, marking the highest sales volume in nearly four years and a 30% increase compared to February.

Shifts in Market Segments

Looking at the broader market, various brands experienced price increases year over year in March. Brands like Infiniti, Lincoln, Mazda, Porsche, and Volvo led the charge, with Infiniti's prices up a startling 18.9% and Porsche not far behind at 11.5%. In contrast, notable declines were observed for brands such as Jeep (-10.6%), Ram (-5.8%), and Mercedes-Benz (-4.7%), which all reported lower average transaction prices.

Interestingly, March's incentive spending was most concentrated in the Luxury Car segment, aligning with market trends that suggest consumers are gravitating towards higher-end vehicles. The Compact SUVs and Full-Size Pickups segments also saw substantial incentives, while buyers in segments like Small/Midsize Pickups encountered the least availability of deals, with only 4.6% of ATP allocated for incentives.

The Impact of Tariffs on Future Pricing

As the summer approaches, Erin Keating, Executive Analyst at Cox Automotive, foresees an upward trend in vehicle prices, spurred by prevailing tariffs on imported vehicles. Keating suggests that vehicles affected by the incoming 25% tariff could see price hikes between 10-15%. They also anticipate an at least 5% increase in prices for vehicles not fully subjected to these tariffs.

Though the market shows resilience, the impending changes pose a risk for consumers as they navigate the evolving landscape of vehicle pricing.

Electric Vehicles: A Growing Divide

In addition to these ongoing trends in conventional vehicles, the electric vehicle (EV) segment also reflects a significant development. March saw average EV prices estimated at $59,205, representing a 7.0% increase compared to the previous year. This increase continues the trend of EV prices outpacing overall vehicle costs, with EV ATPs now nearly 25% higher than the general market average.

Incentives for EVs, however, have begun to decline from February's peak, with the average now at 13.3% of ATP. Tesla remains a key player in this segment, with its ATP for March at $54,582, a 3.5% increase from last year. Despite its strong brand presence, Tesla's sales in Q1 2025 reportedly fell by over 8% compared to the previous year.

Conclusion

The automotive market is navigating through a period of relative stability in pricing, although the prospect of tariff-driven price increases looms ahead. With strategic consumer behavior marked by proactive purchases, especially in March, the industry is poised for an interesting landscape as these changes take effect. Kelley Blue Book's resources continue to be invaluable for both consumers and manufacturers in understanding market dynamics amidst these evolving conditions.