“Despite much speculation regarding major increases in new vehicle prices due to tariffs, the actual increases, as correctly predicted by J.D. Power, have been muted. The average new-vehicle retail transaction price in December for all vehicles is expected to reach $47,104, up $715 or 1.5 percent from December 2024. Separating out electric vehicles, the average price on non-EV’s has powered vehicles rose 1.4% to $46,807.

“In total, retail consumers will have spent $620.0 billion dollars on new vehicles in 2025, up 5.8% from last year. Total aggregate retailer profit from selling new vehicles is expected to be $29.9 billion, down $0.4 billion from last year. Lower EV sales are providing a boost to manufacturer and retailer profitability as the steep discounts once required to drive high EV volumes begin to unwind. This shift marks an important turning point for the industry, though the full impact will be realized in 2026, the first year where these dynamics play out across all twelve months.

“The industry is not without its challenges, however. Affordability pressures remain significant, with monthly finance payments reaching a new record for the month of December at $776. In response, more consumers are turning to extended 84-month loan terms, which are expected to account for 10.1% of financed sales this month — the second highest level on record for the month of December behind 2021.”

“The average manufacturer’s incentive spend per vehicle is on track to reach $3,433, which is $140 higher than November and $77 higher than a year ago. Expressed as a percentage of MSRP, incentive spending is currently at 6.5%, up 0.1 percentage points from last year. Discounts on EVs are expected to average $11,414 in December, down $57 compared with December 2024, and down $472 from November 2025. Discounts on non-EVs are projected at $3,219, an increase of $425 from last year.,” said King.