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Auto Dealers Boost August Sales with July's Record-Breaking Incentives

Robust pricing trends and accumulated consumer demand signal a robust Q3 outlook.

Car Dealers Bolster August Sales with July's Most Generous Incentives
Car Dealers Bolster August Sales with July's Most Generous Incentives

Auto Dealers Boost August Sales with July's Record-Breaking Incentives

New-Vehicle Market Thrives Despite Challenges in 2025

The new-vehicle market in 2025 has been marked by a significant influence from pent-up demand from high-net-worth households and targeted OEM incentives. These factors have played a crucial role in maintaining momentum in the market, despite economic challenges and rising prices.

Pent-up Demand

The market has seen strong demand from high-net-worth households, particularly in the luxury and electric vehicle segments. Despite rising prices, these consumers have been driving sales, demonstrating their ability to afford higher-priced vehicles. This group's demand has helped support the market even as prices increase.

The overall economic environment has been challenging, but pent-up demand has helped maintain sales momentum. This demand has been particularly evident in the U.S., where sales have been boosted by consumers seeking to purchase vehicles before potential price increases due to tariffs and other economic factors.

Targeted OEM Incentives

In July 2025, dealerships offered the highest incentive spend of the year, with incentives reaching 7.3% of the average transaction price. This strategic use of incentives has attracted buyers, helping to move inventory, particularly in the luxury and electric vehicle segments.

The combination of incentives and pent-up demand has stabilized transaction prices. Although prices are rising annually, incentives have helped keep them relatively steady month-over-month, making vehicles more appealing to buyers despite the overall price increase.

Among volume brands, Jeep led ATP declines in July 2025, with its average price falling nearly 12%. Acura bucked the trend with lower prices in July 2025. Audi, BMW, and Genesis posted increases closer to the overall market's 1.5% gain.

Many luxury brands saw higher year-over-year ATPs in July 2025. Cadillac, Land Rover, and Infiniti posted double-digit ATP increases, while Mercedes, Porsche, and Lincoln saw gains more than double the industry average.

July EV sales are preliminary estimated to top 130,000 units, up 20% year over year. The average price of a new EV dropped to $55,689 in July. Despite restrictions on the federal tax deduction, only about 3% of EV buyers qualify for the deduction.

The federal tax deductions will sunset after Sept. 30, which means that 97% of people in the country who are buying an EV for the first time will not benefit from the federal tax deduction.

Overall, the targeted incentives and strong demand from high-net-worth households have been crucial in maintaining momentum in the new vehicle market during 2025. The end result is a market that continues to thrive, despite economic challenges and rising prices.

Technology has been instrumental in the evolution of targeted OEM incentives, with dealerships utilizing digital platforms to offer incentives and promotions directly to consumers.

In the world of sports, sponsorship deals between vehicle manufacturers and sports teams have become increasingly common, as both industries seek to capitalize on the overlapping audiences and boost their brand visibility.

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