Increaseddemand for used cars and electric vehicles leads to stable rates in vehicle prices
The automotive market is experiencing a surge in demand, particularly in the used electric vehicle (EV) sector. According to recent data, the Chevrolet Bolt EV and Nissan Leaf remain the most popular sub-$25,000 options in used EV sales. On the used side, Tesla models dominated, accounting for nearly half of all sales, with the Model 3 alone representing one-third of transactions.
In the new vehicle market, August marked a peak for retail sales in 2025, with new EV sales jumping 19.5% over July and 61% since January. Top-selling EVs included the Chevrolet Equinox EV, Honda Prologue, Hyundai Ioniq 5, and Ford F-150 Lightning. However, the average new-vehicle list price in August was $49,500, down 0.1% from July and 1% from August 2024. The automobile brand that experienced the largest price increase after the introduction of U.S. import tariffs was not explicitly stated, but the tariffs broadly affected all manufacturers importing into the U.S.
The tariffs have led to average price increases for some brands. Hyundai saw an average price increase of $1,050 post-tariff implementation, while Subaru and Mitsubishi saw increases of $1,026 and $3,167, respectively. However, Volkswagen bucked the trend, posting a price decrease of $2,616 despite tariffs. Mazda also saw a price decrease of $1,834.
In the used vehicle market, inventory levels remain healthy, up 7.8% year-over-year, but down slightly from July. Market days' supply for used vehicles fell to a three-year low, underscoring the strength of buyer demand. This trend is reflected in the CarGurus Used Vehicle Demand Index, which shows a 5.6% month-over-month rise in sales of used vehicles.
Lower interest rates could help stimulate the auto refinance market and improve financing conditions, potentially making auto loans more affordable. However, the lingering impact of tariffs and supply chain disruptions continues to exert upward pressure on costs, posing affordability challenges for many consumers, according to a merchant's caution.
Unfortunately, the Texas-based subprime auto lender and used-car retailer Tricolor Holidays filed for Chapter 7 bankruptcy and is liquidating. Some worry that this failure could have a domino effect on auto finance lenders.
Despite these challenges, the demand for both new and used vehicles, particularly EVs, remains strong. The mix of 2026 models is growing, with the latest model year now accounting for nearly one-quarter of new listings. As the Federal Open Market Committee is expected to announce an interest rate cut this week, we may see further stimulation of the auto market.
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