New-Vehicle Incentives Dwindle as Sales Fall
Spring rush fading followed by flat ATPs, rising MSRPs and less generous purchase motivators.
Cox said Volkswagen, Mazda, Land Rover, Volvo and BMW cut incentive spending by more than 10%. Most other automakers also reduced the breaks.
Volkswagen
May’s drop in sales from the unusually strong spring surge nevertheless came with flat incentives and elevated MSRPs.
New-vehicle deliveries fell 10% month-over-month to 15.6 million units, Cox Automotive said, as the rush of consumers fueled by fears of tariff-jacked prices faded.
Meanwhile, overall incentives were essentially flat compared to both April and a year earlier at just under 7% of the average transaction price as most automakers cut the breaks.
The average manufacturer’s suggested retail price, meanwhile, rose about half a percentage point month-over-month to its highest of the year so far at $50,968 and up 2% year-over-year after peaking in December at $51,990.
The average transaction price was therefore also flat at $48,799, though that’s up 1% year-over-year, Cox said.
“While tariff policy is adding uncertainty to the new-vehicle market, prices are holding remarkably steady, a reminder that auto industry change is often slow,” said Cox Executive Analyst Erin Keating.
She predicted vehicle price inflation this summer due to trade tariffs’ impact.
“Right now, we believe dealer profitability is being squeezed, as costs on many products are going up, but raising retail prices in this environment is a real challenge.”
Meanwhile, the electric-vehicle ATP fell 2% month-over-month to $57,734, or 1% year-over-year, as the average incentive package rose from about 12% of ATP to 14%, or more than twice industrywide incentives.
ATPs of EV market leader Tesla alone fell about 2% from April and 3% year-over-year. That included the best-selling EV in the U.S., its Model Y, whose ATP fell 3%.
Originally posted on Auto Dealer Today
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