March witnessed an unexpected boom in vehicle sales, marking the highest sales volume month in nearly four years, as consumers raced to purchase cars ahead of anticipated tariff-related price increases. This surge comes amidst relatively stable new-vehicle average transaction prices (ATPs) and incentive levels, according to the latest report from Kelley Blue Book.
New-vehicle ATPs in March slightly decreased to $47,462 from February's $47,577, while year-over-year they rose by less than 1%. Incentive spending remained flat at 7.0% of ATP compared to February, showing a modest increase from the 6.7% seen in March of the previous year.
Despite these stable figures, the real story unfolded in sales volume, which soared by nearly 30% compared to February.
The buying frenzy was largely driven by the White House's new tariff policy, which imposes a 25% tariff on many vehicles assembled outside the U.S., particularly affecting models priced below $30,000. These models, including popular choices like the Buick Envista, Chevy Trax and Honda HR-V, represent about 14% of total U.S. sales and are now vulnerable under the new policy.
"Sales roared as many consumers rushed to buy vehicles before the expected tariff-driven price hikes took hold," explained Erin Keating, executive analyst at Cox Automotive.
"All signs point to higher prices this summer, as existing 'pre-tariff' inventory is sold down to be eventually replaced with 'tariffed' inventory,” Keating added. “Should the White House posture hold, our team is expecting new vehicles directly impacted by the 25% tariff to see price increases in the range of 10-15%."
In terms of brand performance, Infiniti and Porsche saw the largest year-over-year price increases at 18.9% and 11.5%, respectively. Conversely, brands like Jeep, Ram and Mercedes-Benz experienced declines in their ATPs.
Incentive spending varied significantly across segments, with the luxury car segment leading in March, followed by compact SUVs and full-size pickups. However, shoppers seeking bargains in segments like small/midsize pickups and luxury full-sized SUVs found less favorable conditions, with the lowest average incentives reported.
