On the Dash:
- Higher MSRPs and reduced incentives signal stronger margin discipline at the start of the year.
- Mix continues to drive averages, with trucks and luxury SUVs propping up pricing power.
- EV pricing and demand remain volatile, requiring careful inventory and incentive strategy.
New-vehicle prices climbed to a record high for January as automakers pulled back on incentives and higher-priced trucks and SUVs continued to dominate the sales mix, according to estimates released by Kelley Blue Book.
The average transaction price (ATP) for a new vehicle reached $49,191 in January, up 1.9% from a year earlier and the highest January level on record. Prices declined 2.2% from December, a seasonally typical pullback following year-end sales that tend to skew toward luxury models. December’s previously reported record ATP was revised down to $50,318.
The average manufacturer’s suggested retail price (MSRP) also increased year over year, rising 2.1% to $51,288. While below the typical 3% January increase, MSRPs have remained above $50,000 for 10 consecutive months.
Incentives declined as automakers moved to protect margins. In January, average incentive spending fell to 6.5% of ATP, or roughly $3,200, down from 7.5% in December and 7.1% a year earlier. Incentives were strongest on luxury vehicles and full-size pickup trucks, while full-size SUVs, compact cars and midsize cars carried some of the lowest incentive levels.
Notably, compact SUVs remained the industry’s best-selling segment, with an ATP of $36,414, down 0.4% year over year, while overall ATP rose 1.9%. At the same time, entry-level vehicles continued to disappear. With the subcompact Mitsubishi Mirage largely gone, no new vehicle in the U.S. market now carries an average MSRP below $20,000. The Nissan Versa, averaging $22,315, is currently the most affordable model, though production reportedly ended in December.
Moreover, the average MSRP for a full-size pickup topped $70,000 for the fifth consecutive month, and more than 150,000 were sold in January. By comparison, fewer than 4,000 subcompact cars were sold, despite average MSRPs below $26,000.
EV pricing, however, moved in the opposite direction, with the ATPs falling to $55,715 in January, down 0.6% year over year and 3.1% from December. EV incentives dropped sharply to 12.4% of ATP, down from 18.3% in December and below the 2025 average of 13.7%, though still well above the overall industry average.
EV sales were estimated at just over 66,000 units in January, down nearly 30% year over year and approximately 20% from December, a slightly smaller monthly decline than the broader market’s 25.4% drop.
