A few months after the U.S. imposed sweeping automobile tariffs, the new car market is still feeling their impact, with more changes on the horizon, according to a July intelligence report from CarGurus, an auto research and shopping website. The report warns that “a combination of economic uncertainty, pull-ahead purchases and anticipated price hikes” could dampen sales, boost inventories and push more buyers toward used cars.
“We’re entering a pivotal moment where the ripple effects of tariffs, regulatory shifts and affordability concerns are converging,” Kevin Roberts, director of economic and market intelligence at CarGurus, said in an emailed statement.
During the initial vehicle shopping rush following the tariffs, new car inventory tightened, the report said, declining 3% compared to the same time last year. And as automakers absorbed the increasing costs themselves, new car prices actually fell 1% since the tariffs were announced, to an average of approximately $49,400.
Yet according to Roberts, leaner inventories and lower prices may only last so long. “As new model year vehicles roll onto lots, we may see a strategic shift toward higher-margin vehicles and gradual price increases, which could further strain consumer budgets,” he said.
Automakers would usually turn to discounts and incentives to sustain sales momentum, but the overall value of promotional packages has declined over the past several months, the report said, adding that “conditions in the new vehicle market could grow notably more challenging” if incentives continue to fall as prices climb.
At the same time, the used car market “remains a relative bright spot,” Roberts said. Used vehicle inventory is the highest it has been in three years, surging 9.2% year-over-year, according to the report, an increase driven largely by growing inventories at franchise dealerships.
In particular, used EV demand is likely to increase in the short term, as the report noted that shoppers only have a short window to utilize federal EV tax credits before they expire at the end of September.
Indeed, roughly a third of used EV listings fall within the price threshold ($25,000) for a vehicle to qualify for the tax credit, per the report.
