- The average American new car buyer paid $49,077 last month
- Automakers and dealers have been heavily discounting cars since spring, but that’s starting to change
New car prices rose in August. That’s not unusual, but another trend in the data could be an early warning signal: Dealers and automakers offered fewer discounts than they did a month before.
Since the White House announced new tariffs in the spring, the manufacturer’s suggested retail price (MSRP, or asking price) of the average new car has risen frequently. However, dealers and automakers have combined to protect buyers from the effects of tariffs, offering hefty discounts that have kept the transaction price (the actual price paid) relatively stable.
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In August, both rose. That’s likely a consequence of two things.
One is the arrival of 2026 model-year cars on dealer lots, a normal time for prices to climb.
The other is what automakers have been warning us about for months — now that the U.S. has reached long-term trade agreements locking in tariff rates indefinitely, the people who build and sell cars may not be able to take losses to do so anymore.
Largest One-Month Price Increase in Two Years
- Transaction prices finished the month 2.6% higher than a year ago, which is the largest spike in two years
- Of 31 major brands, 26 raised asking prices
The average car sold in August carried a sticker price of $51,099, 3.3% higher than a year ago. Dealers accepted $49,077 for it, 2.6% more than this time last year. That’s the most significant increase in transaction prices in two years, though not a historical outlier.
Of 31 major brands, only five saw their average sale price drop during the month. Acura had the largest price drop at 6.5%. Tesla followed at 5.5%. Chrysler, Dodge, and Ram buyers also saw minor price decreases.
The rest of the industry raised prices. They did so by dialing back on the hefty discounts that have characterized the market all year. Incentives made up 7.2% of the average sale, down from 7.3% in July. That’s not a big change, but it’s a shift in a long trend, suggesting that automakers may throttle back the discounts, as some have been losing money to increase sales volume recently.
EV Sales Hit Record, Likely to Plummet Soon
- Americans bought a record number of electric vehicles (EVs) as the end of federal EV tax incentives approaches
- Analysts expect EV sales to peak this month, then fall off once the government discount is gone
Americans bought 146,332 electric vehicles (EVs) in August, a record for a single month. EVs made up 9.9% of all new cars sold.
That, however, is almost certainly not the start of a trend. A $7,500 federal tax credit on EV purchases and leases disappears at the end of September. That has many Americans rushing to buy an EV now before the discount is gone.
The average EV buyer paid $57,245, a price factoring in the tax credit.
Tesla, long the leader in EV sales, saw its market share fall to 38%, an 8-year low.
Analysts expect EV sales to peak in September as the end of the credit approaches, then crater in October as prices effectively rise.
The end of the tax credit will likely not mean the end of America’s transition to electric vehicles. Outside the U.S., EVs may reach 25% of all global new car sales this year. America’s automakers will continue developing new EVs to avoid falling behind in the worldwide race.
However, studies consistently show that three factors hold some buyers back from considering an electric car: a lack of infrastructure, worries about range, and high prices.
The country’s EV infrastructure continues to grow even with reduced federal assistance. Range figures for new EVs are steadily improving as automakers further develop EV know-how and explore new battery technologies.
Prices, however, are about to rise.
