Ever since U.S. auto tariffs were announced in March, the market has been patiently waiting for the policy to directly impact sticker prices. A huge contingent of consumers rushed to dealerships this spring to purchase pre-tariff inventory before it was too late. However, as we reach mid-August, much of that inventory has dried up, yet prices have barely moved.
Over 75 percent of new inventory now reflects post-tariff pricing, yet average new list price sits about 1 percent below pre-tariff levels at $49,400 according to the CarGurus July 2025 Intelligence Report. Overall, new prices are nearly six percent below 2023 levels. At least for now, OEMs are absorbing the higher import costs—through mix management, cost controls, and targeted promotions—to keep sticker shock at bay.
It’s worked too, with new vehicle demand up 10.5 percent month over month and 3.5 percent year over year. Still, as 2026 model year vehicles begin to arrive, OEMs may look to recover tariff-related costs, likely through higher-margin nameplates, option packaging, and gradual price actions rather than sharp increases. As of right now, 2026 arrivals are only 13 percent of listings.
State of the New and Used Market
In line with the increase in demand and the ever-present tariffs, inventory is slightly tighter than usual. New inventory is down 0.8 percent MoM and 2.8 percent YoY. Market days supply is down 3.2 percent MoM and 12.3 percent YoY, reflecting the run on pre-tariff stock and tighter overall supply. Days on market was marginally lower in the month and below last year, but by less than one percent. It has seen a dip year to date though thanks to the tariff sales rush, it was sitting above 90 days in January and was now at 84.2 days in July.
The used market continues to perform well, buoyed by higher inventory levels and steady buyer activity. Used inventory is at a three-year high, up 9.2 percent YoY, but remained flat MoM. Average used list price is up 0.4 percent MoM and 2.3 percent YoY, driven by tight supply of 3- to 4-year-old vehicles. Despite the price increase, near-new vehicles still provide good value for their place in the market. Dealers looking to acquire inventory should appraise using original MSRP, options, and current new incentives to gauge perceived value.
The CarGurus Used Vehicle Demand Index saw a big rebound from a 2025 low in June, up 8.9 percent in the month and 3.6 percent YoY. That demand jump helped lower days on market by 0.2 percent MoM, while a high turnover rate throughout 2025 has days on market down six percent YoY. Supply was also down, falling four percent MoM but is still up 3.6 percent YoY due to larger listing volumes. Supply is healthier than last year even as sales quicken.
Short-Term Rush, Long-Term Recalibration for EVs
EVs are entering a transitional phase as government incentives are set to go away at the end of September. This is pulling some new-EV demand forward but could depress Q4 interest. It’s an unfortunate reality for alternative powertrains just as hybrid and EVs approach 20 percent market share for new vehicles. However, the current average list cost for a new BEV is $63,400, significantly higher when compared to $48,500 for internal combustion engine powertrains and $47,300 for hybrids. Without the tax credit to help even the playing field, that price premium is a tough barrier for entry in a market dominated by customers looking for affordability.
The used market is a different story though. There affordability is improving. Over 34 percent of used EV listings now fall below $25,000, and roughly one in three used EVs can qualify for an EV tax credit when purchased through a dealer. Tesla currently dominates sub-$25K used EV listings, alongside the Chevrolet Bolt EV and Nissan Leaf, expanding entry-level choices for budget buyers.
Affordability and Buyer Behavior
Affordability remains the central concern across both markets. Even as average new prices sit below 2023 levels, monthly payments remain elevated due to interest rates and insurance costs. That reality is nudging price-sensitive shoppers into late-model used vehicles, while higher-income households continue to support premium segments on the new side.
The data points to a market that’s adapting rather than stalling. New-vehicle demand is steady, inventory is tighter, and prices are being managed through incentives. Used supply is healthy and turnover is stronger than last year. There’s still plenty of time for change though. As 2026 model-year vehicles roll out and incentives begin to taper, there’s still a chance the market lags as prices increase through the end of the year.
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