Kelley Blue Book Report: New-Vehicle Costs Rise in June, Outpacing Transaction Prices as Sales Slow, Incentives Tick Up

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ATLANTA, July 14, 2025 ~ According to data released today by Kelley Blue Book, a Cox Automotive brand, the cost of a new vehicle has continued to rise in June. However, the increase in average transaction price (ATP) was relatively mild and below the long-term average. The sales pace for new vehicles remained steady from the previous month, while inventory levels increased.

The Kelley Blue Book June ATP report highlights several key takeaways. The average ATP for new vehicles in June was $48,907, which is a 0.4% increase from the downwardly revised May ATP of $48,717. This marks a 1.2% year-over-year gain, which is the largest increase seen in 2025 so far. However, it is still well below the 10-year average increase of 3.9%.

The sales pace for new vehicles in June was marginally lower at 15.3 million on a seasonally adjusted basis compared to May's 15.6 million. This slight decrease can be attributed to the market cooling down from its spring surge. The seasonally adjusted annual rate (SAAR) of sales also decreased from April's 17.3 million to 17.8 million in March.

As sales moderate, inventory levels tend to increase and incentives typically follow suit. In June, inventory levels rose to 82 days' supply according to Cox Automotive's measurement, up from 72 days in May. As expected, incentives also increased modestly last month with discounts averaging at 6.9% of ATP, which is a slight increase from May's 6.8%. This is also higher than last year's incentive spending average of 6.5% of ATP.

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One notable trend seen in June was that new-vehicle manufacturer's suggested retail prices (MSRPs) continued to rise for the third consecutive month. The average MSRP for June was $51,124, making it the second-highest on record after December 2024's $51,990. This suggests that product costs are increasing at a faster rate than transaction prices, with the June MSRP being 2.3% higher than last year's while the ATP only increased by 1.2%.

In a significant development, the average transaction price paid for a Mitsubishi Mirage sedan in June was $18,484. This marks the end of an era as there were virtually no incentives available for this model and it was the last remaining new vehicle priced below $20,000. With the vehicle being discontinued and no new models arriving, its available inventory is quickly disappearing. According to vAuto Live Market View, there are currently less than 1,700 Mirages available across the U.S., and at this rate of sales, it is expected to go extinct by the end of summer.

Executive Analyst at Cox Automotive, Erin Keating commented on this trend saying, "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." She also noted that if this trend continues, it could impact profitability for businesses as they absorb more of the added costs instead of passing them onto consumers.

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As sales for electric vehicles (EVs) slowed down in June, their average transaction prices also decreased. The Kelley Blue Book team's initial ATP estimate for a new EV in June was $56,910, which is lower than May's revised-lower ATP of $57,236. Year over year, new EV prices saw a decrease of 2.8%.

However, incentives for EVs have been on an upward trend for two consecutive months and reached a record high of 14.8% of ATP or more than $8,400 in June. Despite higher sales in Q2 compared to Q1, EV sales were still down by more than 6% year over year, with market leader Tesla's sales continuing to decline. In the first half of 2025, Tesla's sales have decreased by more than 10%. Other notable brands such as Ford and Kia also saw lower EV sales compared to last year.

With Tesla's sales slowing down, their average transaction prices have also decreased. In June, the ATP for Tesla was $54,989, which is a 5.7% decrease from May's ATP of $55,276. The new Model Y, which is currently the best-selling EV in the U.S., saw a modest decline in its ATP from $53,898 in May to $53,224 in June. Despite this decrease, Tesla sold 25,095 Model Ys in June, making it their best month so far in 2025.

Overall, the data tables for these findings are available for download. As the market continues to navigate through rising costs and slowing sales pace for both traditional and electric vehicles, it will be interesting to see how businesses adapt and if consumer prices will eventually reflect these changes.
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