By Naveen Athrappully
The average transaction price (ATP) of new vehicles remained steady in the United States in May compared to the previous month, despite the Trump administration’s auto import tariffs, vehicle valuation company Kelley Blue Book (KBB) said in a June 10 statement.
The ATP for new vehicles in May was $48,799, “virtually unchanged from the revised April ATP of $48,811,” KBB said. ATP was 1 percent higher than in May 2024.
“While tariff policy is adding uncertainty to the new-vehicle market, prices are holding remarkably steady, a reminder that auto industry change is often slow,” said Erin Keating, executive analyst at Cox Automotive, which owns KBB.
“Many automakers are keeping true to a promise to hold the line on pricing, at least in the near term. We are still expecting prices to move higher through the summer, as the inflationary impact of tariffs begins to hit. Right now, we believe dealer profitability is being squeezed, as costs on many products are going up, but raising retail prices in this environment is a real challenge.”
The administration had imposed a 25 percent tariff on auto imports in April. President Donald Trump later signed an order preventing overlapping duties from being charged on the same vehicle to provide relief to automakers.
A 25 percent tariff on imported automobile parts took effect last month. Parts meeting the U.S.–Mexico–Canada Agreement requirements were exempted by the administration to preserve the stability of the interdependent North American supply chain.
The tariffs were expected to trigger a run in car prices. However, prices have shown mixed reactions over the past two months. In April, new vehicle ATPs rose by 2.5 percent from the previous month.
But with ATPs remaining mostly flat in May, it is unclear whether the April jump was the beginning of a strong uptrend in price or just a temporary market reaction.
Meanwhile, the pace of new vehicle sales “slowed notably” in May from April, according to KBB. In addition, incentives for these vehicles rose slightly last month to 6.8 percent of ATP, up from 6.7 percent in the previous month.
U.S. Manufacturing Boost
Multiple automotive companies have announced investments in the United States in the face of import tariffs instituted by the Trump administration.
In March, Hyundai said it planned to invest $21 billion in the United States between 2025 and 2028. In April, Honda Motor Co. said it intended to move the manufacturing of five-door Civic hybrid model vehicles from Japan to Indiana.
Last month, Mercedes-Benz announced plans to produce a new “core segment’ vehicle in Tuscaloosa, Alabama. On May 27, General Motors (GM) said it aimed to invest $888 million in its Tonawanda Propulsion plant in Buffalo, New York, as part of boosting engine production in the United States.
More recently, on June 10, GM announced another $4 billion investment in its American manufacturing plants over a two-year period. The investments will be made at the company’s Orion assembly plant in Michigan, Fairfax assembly plant in Kansas, and Spring Hill manufacturing facility in Tennessee.
“We believe the future of transportation will be driven by American innovation and manufacturing expertise,” said GM CEO Mary Barra.
The $4 billion investment is expected to give General Motors the ability to assemble more than 2 million vehicles in the United States every year.
Meanwhile, the administration has secured the supply of rare earths from China—crucial for America’s automotive manufacturing.
Trump confirmed the development in a June 11 post on Truth Social. Beijing will supply the necessary rare earths and full magnets, with the United States allowing Chinese students to attend American colleges and universities in exchange, he said.
“We are getting a total of 55 percent tariffs, China is getting 10 percent,” the president said.
The deal requires final approval from Trump and Chinese Communist Party leader Xi Jinping.
