September marked the first time the average transaction price (ATP) for new vehicles exceeded $50,000. On today’s episode of CBT Now, Erin Keating, executive analyst at Cox Automotive, joins us to discuss it and what it means for the industry moving forward.
Keating emphasizes that the market is nuanced. While the ATP has surpassed $50,000, the median price for new vehicles has been over $50,000 since 2023. The average is influenced by the high and low ends of the market, making it important to consider context.
According to Cox Automotive data, 60 models sold for over $75,000, primarily in the luxury and EV segments, and for the new 2026 model years. There were 41 vehicles available for under $30,000 and another 41 priced between $35,000 and $45,000.
In 2021 and 2022, post-pandemic, the market saw a significant spike. Keating notes that even without these outliers, market trends would have naturally pushed the ATP over the $50,000 ATP benchmark due to inflation.
Several factors contributed to September’s record ATP:
- Consumer preference: Buyers increasingly gravitate toward larger, more expensive vehicles.
- EV rush: EV sales accounted for 12% of the market, driving up the average due to higher price points.
Consumer sentiment also weakened in September. Many Americans remain concerned about economic health and stagnant interest rates on borrowing despite the Fed’s recent rate cut. The rising monthly cost of ownership is adding pressure, especially for subprime borrowers, many of whom are delaying purchases until lower-priced options are available.
"We're going to have to be conscious of the fact that we have some people who might need wheels but are a little bit worried about what's going on and don't know how to interpret it."
In September, incentive spending reached 7.4% of ATPs, the highest year-to-date. Pre-pandemic, incentives hovered around 10%. Currently, most manufacturers target a 6–8% incentive rate to manage backend costs. Offers of 0–3% APR have largely vanished, with OEMs leaning on dealers to offer more discounts to attract buyers.
MSRPs hit a record high
The average new-vehicle MSRP also reached a record $52,183 in September, following the same upward trend as ATPs. Historical trends show that consumers continue to demand vehicles with advanced technology, higher-end features and improved quality.
The future of electric vehicles
With the federal tax incentives expired, electric vehicle demand will naturally dip. However, manufacturers are likely to continue offering deals to sustain sales. Keating predicts that as new and used EVs become more common on the roads, consumer interest will grow, supporting continued adoption.
The impact of tariffs and the OBBBA
Earlier this year, President Trump’s tariff policy sent shockwaves through the auto industry. The recently passed One Big Beautiful Bill Act (OBBBA) provides automakers with opportunities to reduce costs, fully expense domestic R&D and eliminate Corporate Average Fuel Economy (CAFE) penalties.
However, geopolitical relations with Canada and Mexico remain a pressing concern and could influence market prices in 2026. Keating expects prices to increase, but not as drastically as initially feared.
Chinese automakers and competition
Keating does not foresee Chinese automakers entering the U.S. market without committing to U.S. investment and manufacturing. Should that happen, competition would increase, allowing more affordable vehicles to reach American roads, which is critical to sustaining the used-vehicle market.
To offset rising costs and compete with Chinese automakers, automakers may increasingly decontent vehicles to lower MSRPs.
Advice for dealers
Keating encourages dealers to manage customer expectations, helping buyers find vehicles within their price range, even if they lack certain features. Subprime customers currently represent the highest need. Dealers should also be strategic with OEM orders and trade-ins.
With total monthly ownership costs remaining high, guiding customers through their financial picture is essential to closing sales in today’s market.
