The U.S. auto market is entering fall 2025 with mixed signals for buyers and sellers. New vehicle inventories are healthy, lease incentives are climbing, and EVs are temporarily surging ahead of a tax credit deadline. Meanwhile, the used car market remains tight, keeping prices elevated and dealer leverage strong. Here’s a full Car Market Update on new cars, used cars, and financing conditions.
New Car Market: Neutral Conditions with Brand-Specific Deals
Nationwide new car inventory sits at 73 days of supply, roughly 2.7 million vehicles, similar to levels a year ago. Market day supply measures how long it would take to sell all available stock at the current sales rate, and it varies sharply by brand:
- Tight supply (limited discounts): Toyota, Lexus, Honda
- High supply (greater discounts): Land Rover, Ram, Lincoln, Audi, Mitsubishi, Dodge, Jeep
As a rule, higher supply equals stronger negotiating leverage, while lower supply restricts discounts.
EVs Facing a September Surge
Demand for electric vehicles has spiked ahead of the October 2025 expiration of EV tax credits. Manufacturers have pushed lease incentives aggressively, creating a temporary fire-sale environment. EV inventories are falling quickly, but analysts expect sales momentum to slow sharply by October as customers pull forward purchases.
Hybrids remain the most popular powertrain, while internal combustion engine (ICE) models vary by brand and model.
2024 Models Still on Dealer Lots
Despite 2026 models arriving, several brands are carrying significant shares of unsold 2024 vehicles:
- Maserati: 30% of inventory
- Alfa Romeo: 25%
- Dodge: 17%
- Mitsubishi: 16%
- Ford: 7%
This creates additional discount pressure on 2024 stock as automakers seek to clear lots.
Pricing and Incentives
The average transaction price for a new car is $48,480, near record highs. While buyers may hope for lower prices, 2026 model year increases in MSRP and destination charges are limiting discounts on 2025 models.
Manufacturer incentives currently average 7.3% of transaction value, or about $7,300 on a $100,000 car, well below historic norms of 11–12%. Incentives may rise later in Q4, when automakers traditionally boost end-of-year offers.
Leasing is also becoming more attractive, especially for EVs, as it allows customers to manage monthly payments more flexibly. Brands such as Nissan, Mazda, Hyundai, Kia, and Honda stand out for offering both inventory availability and relatively modest price hikes.
Overall, the new car market is neutral, neither strongly favoring buyers nor sellers.
Used Car Market: Sellers Retain the Advantage
The average listing price for a used vehicle is $25,527, down from pandemic highs near $30,000 but slightly higher year over year. Inventory sits at 43 days of supply, tighter than new car levels, making it a sellers’ market.
Lower-priced used cars are especially scarce:
- Sub-$15,000 vehicles: only 31 days of supply
- Average mileage of used cars on sale: 70,000+ miles
This scarcity keeps dealer leverage high, particularly in the affordable segment. Customers searching for cars under $15,000 face limited choices and higher-than-expected prices.
Auto Loan APRs: Relief May Be Ahead
Financing remains a major challenge.
- Average APR for new cars: above 9%
- Average APR for used cars: above 14%
While some new models offer 0% financing promotions, the used car side offers little relief, leaving buyers with steep monthly payments.
However, the Federal Reserve is expected to cut interest rates in late 2025, which could gradually reduce auto loan APRs in the coming months. Buyers holding out for better financing conditions may benefit by waiting until Q4.
Outlook: Neutral for New, Tight for Used
The fall 2025 Car Market Update paints a split picture:
- New cars: Balanced, with clear deal opportunities on oversupplied brands and lingering 2024 models. Leasing remains a strong alternative.
- Used cars: Still a sellers’ market, especially for affordable vehicles.
- Financing: High APRs remain a barrier, though rate cuts may offer gradual relief by year-end.
For consumers, timing and brand choice are critical. Shoppers chasing discounts should target high-inventory brands or leftover 2024 stock, while used car buyers may find more value by trading in their current vehicle to offset inflated prices.
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