The April 2025 SAAR came in at 17.3 million units, down 3.1% from last month but up 7.8% from April 2024. Even with a slight month-over-month decline from the short-term peak of last month’s SAAR, April 2025 still saw the second-highest SAAR since April 2021. This highlights the strong demand in the current market as consumers are motivated to purchase a vehicle before potential tariff-related price increases.

The auto industry continues to keep a close eye on the tariffs implemented by the Trump administration in early April. If these tariffs hold over the next several months, the auto industry will likely experience sluggish sales and tighter margins as the industry adjusts to global supply chain pressures. If tariffs are rolled back, positive sales momentum will likely continue.

Unadjusted Sales Data

Unadjusted sales were also markedly higher than this time last year. With just one more selling day than April 2024, April 2025 industry sales (on an unadjusted basis) reached 1.46 million units, an 8% decrease from last month and an 11.1% increase from April 2024. This month’s unadjusted sales surpassed the nine-year April average of 1.3 million units (2017 – 2025) by over 162 thousand. See the chart below for a look at unadjusted sales over the last nine Aprils.

Inventory Metrics

The industry’s inventory-to-sales ratio fell to 1.10x in March 2025 from 1.22x in February 2025. The inventory-to-sales ratio will likely trend closer to 1.0x as the tariffs impact both import activity and sales volumes over the next several months. The chart below presents the industry’s inventory-to-sales ratio over the last three years.

In April 2025, industry-wide days’ supply came in at 47 days. While the margin between the current and prior month comparisons continues to narrow, April 2025 is the second consecutive year-over-year decline in days’ supply after numerous months of improvements. With uncertainty surrounding the tariffs and their potential impacts on the auto industry, we will likely see days’ supply continue to trend lower over the next several months until stability from the tariff implementations is reached. The chart below presents days’ supply for U.S. light vehicles over the past 24 months (per Wards Intelligence).

Transaction Prices

The average transaction price for new vehicles in April 2025 is expected to be $45,764, up 2% from April 2024, reflecting the influx of buyers trying to get ahead of tariffs and secure slightly lower dealer discounts. Thomas King, the president of data and analytics at J.D. Power, discussed the factors impacting average transaction prices for new vehicles in April:

“New-vehicle retail sales for April 2025 are expected to increase from a year ago. Retail sales of new vehicles are expected to reach 1,284,800, a 14.7% increase from April 2024. Comparing the same sales volume without adjusting for the number of selling days translates to an increase of 19.3% from 2024.”

Incentive Spending and Profitability

J.D. Power notes that average incentive spending per unit in April 2025 is expected to be $2,808, down 8.5% from last month but up 8% from April 2024. Incentive spending as a percentage of the average MSRP is expected to come in at 5.6% for April 2025, an increase of 0.3 percentage points from this time last year.

J.D. Power notes that April 2025 total retailer profit per unit (includes vehicle gross plus finance and insurance income) is estimated to rise to $2,525 in line with April 2024.

May 2025 Outlook

After rallying in April, Mercer Capital expects the May 2025 SAAR to come in lower, as we believe demand was pulled into March and April with dealers across the country advertising some form of “pre-tariff pricing.” It is expected that the recent import tax will be felt by manufacturers, dealers, and consumers alike, and how each OEM and dealer passes along rising costs will affect not only volumes and profitability but also Blue Sky values. We’ll be keeping tabs on the market to keep you up to date on tariffs and other industry-relevant news. Subscribe to our Auto Dealer Valuation Insights blog to get updates on industry-relevant topics straight to your inbox.

Mercer Capital provides business valuation and financial advisory services, and our auto team helps dealers, their partners, and family members understand the value of their business. Contact a member of the Mercer Capital auto dealer team today to learn more about the value of your dealership.