Consumer spending reaches record as August new vehicle sales climb 8.2%

While results are strong, they should be viewed in the context of several unusual factors that are distorting typical monthly sales trends, states analyst

Troy, Mich.—Total new-vehicle sales for August 2025, including retail and non-retail transactions, are projected to reach 1,483,000, an 8.2% increase year over year, according to a joint forecast from J.D. Power and GlobalData. New-vehicle retail sales for August 2025 are projected to reach 1,283,000, a 7.8% increase from August 2024.

While a strong result, they should be viewed in the context of several unusual factors that are distorting typical monthly sales trends, stated analyst Thomas King.

• Federal credits of up to $7,500 on EVs will expire on Sept. 30, prompting many EV shoppers to accelerate purchases that otherwise would have occurred later this year. As a result, EV retail share in August is expected to reach an all-time high of 12.0%, compared with 9.5% a year ago.

• Labor Day lands in the August sales reporting period this year. The Labor Day weekend is typically one of the highest sales volume weekends of the year, powered by elevated manufacturer promotional activity and elevated discounts. This year, manufacturers have kept incentives restrained due to tariffs. Normally, incentives as a percentage of MSRP increase by about half a point from January through late summer, but this year they’ve slipped to 6.2% in August from 6.3% in January, underscoring the effect of tariff-related cost pressures.

• Lease returns remain at historically low levels following the reduced leasing activity during the 2022 supply shortages. With fewer lease customers cycling back into the market, new vehicle sales are facing added pressure compared with typical seasonal patterns.

• From a total sales perspective, fleet deliveries are expected to reach 199,854 units in August, up 11.2% primarily due to the low baseline recorded in August 2024. Fleet volume is forecast to represent 13.5% of total light-vehicle sales, an increase of 0.4 percentage points year over year.

“In sum, August’s retail sales results point to solid new vehicle demand,” King stated. “The results are unquestionably inflated by shoppers accelerating their electric vehicle purchases to take advantage of Federal EV credits — but the sales pace for non-EVs remains robust, especially given the modest discounts available on those vehicles.

“The elevated sales pace, combined with strong average transaction prices mean consumers are on track to spend nearly $54.1 billion on new vehicles this month — 5.3% higher than a year ago and the highest on record for the month of August.”

September sales will be influenced by multiple crosscurrents. With the federal EV tax credit expiring at the end of the month, automakers are expected to make a final, aggressive push to move remaining inventory.

At the same time, tariffs are shaping pricing and incentive strategies, adding an average cost of $4,275 per vehicle, though the effect varies significantly by model. So far, manufacturers have managed to keep price hikes relatively restrained, with some vehicles unaffected.

Further adjustments are likely as the year unfolds and new model-year introductions arrive, though many companies may hold back their most definitive incentive actions until year-end.

The Details

• Fleet sales are expected to total 199,854 units in August, up 11.2% from August 2024. Fleet volume is expected to account for 13.5% of total light-vehicle sales, up 0.4 percentage points from a year ago.

• Internal combustion engine (ICE) vehicles are projected to account for 72.2% of new-vehicle retail sales, a decrease of 5.6 percentage points from a year ago. Plug-in hybrid vehicles (PHEV) are on pace to make up 2.5% of sales, up 0.6 percentage points from August 2024, while electric vehicles (EV) are expected to account for 12.8% of sales, up 3.2 percentage points, and hybrid electric vehicles (HEV) are expected to account for 12.6% of new-vehicle retail sales, up 2.0 percentage points.

• U.S. final assembly vehicles are expected to make up 52.5% of sales in August, up 2.4 percentage points from a year ago.

• Trucks/SUVs are on pace to account for 82.0% of new vehicle retail sales, up 2.1 percentage points from August 2024.

• Retail inventory levels are currently at 2.10 million units, an 18.6% increase from August 2024.

• The industry’s inventory days of supply is 58 days in August, up from 51 days a year ago.

• The average new-vehicle retail transaction price in August is expected to reach $44,750, up $985 from August 2024. Transaction price as a percentage of MSRP increased to 89.3%, down 0.4 percentage points from a year ago.

• Retail buyers are on pace to spend $54.6 billion on new vehicles, up $3.2 billion from August 2024.

• Average incentive spending per unit in August is expected to reach $3,105, up $38 from August 2024. Incentive spending as a percentage of the average MSRP is expected to decrease to 6.2%, down 0.1 percentage points from August 2024.

• Average incentive spending per unit on trucks/SUVs in August is expected to be $3,302, up $53 from a year ago, while the average spending on cars is expected to be $2,146, down $163 from a year ago.

• Leasing is expected to account for 23.0% of sales this month, down 1.1 percentage points from a year ago.

• The average time a new vehicle remains in the dealer’s possession before sale is expected to be 51 days in August, up from 48 days a year ago.

• 29.5% of vehicles sold in less than 10 days in August, down 2.6 percentage points from a year ago.

• Average monthly finance payments are on pace to be $743, up $13 from August 2024. The average interest rate for new-vehicle loans is expected to be 6.40%, down 0.38 percentage points from a year ago.

• So far in August, average used-vehicle retail prices are $29,100, up $375 from a year ago. Trade-in equity is trending towards $8,030, which is up $275 from a year ago.

• 25.3% of trade-ins are expected to carry negative equity this month — an increase of 1.1 percentage points from August 2024.

• Finance loans with terms greater than or equal to 84 months are expected to reach 11.2% of finance sales this month, up 1.8 percentage points from August 2024.