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In June 2025, the US new-vehicle market experienced a shift following the implementation of tariffs imposed earlier in the year. The tariffs, including a 25% levy on imported vehicles, have increased car prices by approximately $2,000 per vehicle, with automakers passing on 80% of the $30 billion tariff cost to consumers [1].
This price hike has put pressure on both automakers and consumers, causing a slowdown in new-vehicle sales growth. After a rush in the first half of the year, sales declined from a seasonally adjusted annual rate (SAAR) of 17.5 million in March to about 15.3 million by June [2]. The tariffs have affected vehicles at both ends of the market, particularly those under $30,000 that are often imported, such as the Chevrolet Trax and Nissan Sentra.
Despite the tariffs, average transaction prices remained relatively steady in May and June, with the average manufacturer's suggested retail price (MSRP) reaching a new high of $50,968 in May 2025 (up from $50,774 in April) [3]. Automakers are currently absorbing some costs to avoid rapid price hikes, but prices are expected to rise through the summer as tariff-related inflationary pressures materialize.
The tariffs have also created uncertainty for automakers, leading to inventory adjustments and fewer incentives, thereby sustaining higher prices. Some automakers, such as Ford, have announced mid-year price increases of about $600 on certain popular models arriving in late June, attributing part of the increase to tariffs [4].
In response to the sustained tariffs, automakers are shifting some production domestically or adjusting pricing strategies. The immediate market performance shows a contraction in sales pace and a cautious approach to pricing, with a likely trend toward higher vehicle costs and tighter profits for dealers in the months ahead [1][2][4].
On a positive note, the US new-vehicle market is projected to grow by 2.5% in June 2025, reaching approximately 1.25 million units. In the first half of 2025, total sales of new vehicles are expected to reach around 7.77 million units, up 0.4%. New-vehicle retail sales in June 2025 are projected to reach approximately 1.02 million, a 6.7% increase from June 2024 [5].
Retail inventory levels are currently at 2.16 million units, a 22.9% increase from June 2024. The average time a new vehicle remains in the dealer's possession before sale is expected to be 49 days in June, up from 46 days a year ago [6].
In the hybrid market, Japanese brands continue to dominate, particularly Toyota, which leads with 26 models. Hybrids have set a monthly record for June, with a retail share of 14.1%, up 3.8pp from a year ago [7]. Domestic and European automakers offer only a limited number of hybrid models compared to Japanese brands, representing the biggest untapped potential for hybrid growth [8].
Fleet sales are expected to total 231,081 units in June, down 12.7% from June 2024. Fleet volume is expected to account for 18.5% of total light-vehicle sales, down 3.2pp from a year ago [9]. Leasing is expected to account for 20.4% of sales this month, down 2.2pp from a year ago [10].
The average manufacturer incentive per vehicle in June 2025 is on track to reach $2,727. The average interest rate for new-vehicle loans is 6.89%, down 0.08pp from a year ago. Expressed as a percentage of MSRP, incentive spending in June 2025 is currently at 5.4% [11].
Trucks and SUVs are on pace to account for 81.8% of new-vehicle retail sales, up 1.7pp from June 2024. The average monthly finance payments in June are on track to reach $747, the highest on record for the month of June [12].
In conclusion, the tariffs have significantly impacted the US new-vehicle market in June 2025, causing a slowdown in sales growth, increasing vehicle prices, and creating uncertainty for automakers. However, the market is projected to rebound by 2030 as the impact diminishes. The hybrid market continues to grow, with Japanese brands leading the charge, and domestic and European automakers offering the biggest potential for growth.
The tariffs imposed on imported vehicles in the US have caused a ripple effect across the automotive industry, leading automakers to absorb some costs and adjust pricing strategies to avoid rapid price hikes, yet with prices expected to increase further due to inflationary pressures. This uncertainty from the tariffs has also affected the finance sector, as the average interest rate for new-vehicle loans remains steady, but incentive spending as a percentage of MSRP has increased. In the meanwhile, the hybrid market, particularly dominated by Japanese brands, is experiencing growth, making it an untapped potential for business expansion, not just for Japanese brands but also for domestic and European automakers.
