“The average used-vehicle price is trending toward $29,696, up $725 from a year ago. This reflects the combination of reduced supply of recent model-year used vehicles due to lower new-vehicle production during the pandemic, fewer lease maturities and manufacturers moderating discounts. The rise in used-vehicle prices is good news for new-vehicle buyers with a trade-in, although average trade-in equity in November is down a modest $111 year over year to $7,822. The number of new-vehicle buyers with negative equity on their trade-in is expected to reach 26.9%—an increase of 3.3 percentage points from November 2024. Although negative equity is rising, it remains below the peak November level of 32.9% recorded in 2019.

“Elevated transaction prices in November are not enough to offset the lower sales pace, with consumers on track to spend nearly $46.8 billion on new vehicles this month—6.4% lower than a year ago. Total retailer profit per unit—which includes vehicle gross plus finance and insurance income—is expected to be $2,161, up $6 from November 2024 and down $54 from October 2025. The improvement in retailer profit per unit is primarily a function of lower EV sales, which typically generate lower retailer profits than non-EVs. Total aggregate retailer profit from new-vehicle sales for this month is projected to be $2.2 billion, down 7.7% from last year.

“Subprime mix had been on a steady upward trajectory this year, topping out at 9.8% in October, the highest of any month since March 2020. Subprime mix fell slightly from October to 8.9% in November, still 2.8 percentage points higher than November 2024.

“The industry enters the holiday sales season facing a mix of affordability challenges, evolving incentive strategies and lingering effects from the EV pull-ahead earlier this year. While interest rates have eased and used-vehicle values remain strong—providing some support for trade-in equity—the number of leases set to expire in December is projected to be more than 15% lower than the same period a year ago and 50% lower than in 2023, thus limiting the typical year-end boost. Automakers are expected to maintain disciplined pricing and restrained incentives, particularly in non-EV segments, as they balance profitability with the need to stimulate demand. How aggressively manufacturers choose to adjust discounting and promotional activity during December will be critical in shaping the close of 2025,” said King.