The summer car market is cooling off, and that’s good news if you’re a buyer. Labor Day is just around the corner, and believe it or not, Labor Day car sales are already here. Whether you’re eyeing new car deals, looking for used car bargains, or trying to beat the EV tax credit deadline, August 2025 offers real chances to save if you know where to look.

Let’s break down what’s happening in the car market right now, and how you can use it to your advantage.

Update (8/5/2025): August new car incentives are now live! See the deals at our CarEdge Deal Hub.

Used Car Prices in August: Still Trending Down

If it feels like used car prices have been slipping for months, that’s because they have. According to Black Book, wholesale used car prices are down about 5% since May, and we’re finally seeing those declines show up on retail lots. Compact sedans and mainstream crossovers have seen prices fall the most this summer. 

Why It Matters

• Why do wholesale auctions matter? Wholesale auctions are where dealers get their inventory and where your trade-in likely ends up. When prices drop there, it’s a signal.
  
• Retail used car prices have been holding steady around $25,000, but they’re now trending downward. We track used car prices here.

Why Are Used Car Prices Falling?

Used car prices are falling for a few key reasons. First, new car incentives remain strong, drawing many would-be used car buyers toward new vehicles instead. Second, interest rates for used car loans remain above 10% APR for most buyers, while some new car offers include rates as low as 0% for 72 months for well-qualified shoppers. This makes new cars more attractive despite their higher sticker prices. 

Finally, there’s the typical seasonal decline in demand. After peaking in the spring and early summer, used car interest naturally tapers off as we head deeper into the back-to-school season.

What to Expect in August

In August, expect more price drops. If you’re thinking of selling or trading-in your vehicle, we recommend doing it sooner rather than later as resale values continue to slide. 

Used car dealerships are notorious for resisting price cuts until they’re forced, so don’t expect advertised discounts. But if you negotiate — or let CarEdge’s AI Negotiator do it for you — you could score serious savings.

New Car Market Forecast: Caution Ahead, Except for EVs

August is usually a sleepy month for new car sales, and this year will be no different, says CarEdge Co-Founder Ray Shefska:

“August is traditionally a challenge in retail automotive due to it being back to school month. Parents are buying Nikes and bikes and all kinds of school supplies and not cars.”

Less demand means greater negotiating power for buyers, and less leverage for sellers. The exception is for EVs. After months of sales slowdowns, real-time market data from CarEdge Pro shows that electric vehicles are once again hot sellers as buyers look to buy before the federal EV tax credit expires on September 30, 2025.

Why August Might Be Slower Than Usual

Frankly, drivers have their finances focused on more pressing needs this time of year.

• It’s back to school season, and that delays big expenses for many families.
• Inflation and tariffs are pushing costs up for everything, not just cars.
• Interest rates are still high for most buyers.
• Automakers may hold back the best incentives until Labor Day 2025 sales arrive.

CarEdge’s Ray Shefska sees that August will be a rarity in that EVs will once again have the upper hand in the car market, although that won’t last long.

“If we see any uptick in sales at all,” Ray adds, “I would suspect we would see that in the EV sector with people buying those vehicles before the federal tax credits expire on September 30th. Otherwise, folks will be waiting to see what Labor Day sales have to offer in September 2025.”

New Car Prices in August 2025

As of August 2025, the average new car price is $48,907, a figure that’s remained virtually unchanged since 2022. Prices initially surged during the pandemic-era chip shortage, but rather than falling back, they’ve held steady due to persistent inflation and strong consumer demand. Despite high prices, buyers haven’t backed off. This has been a recipe for persistently high new car prices, to the delight of automakers.

2026 Model Pricing Should Start to Take Shape

August is also when we expect to learn more about 2026 model year pricing, especially with tariffs forcing automakers to make tough decisions. While many brands delayed announcing new pricing earlier this summer, August is typically when those updates begin to roll out. With higher import costs in play, some automakers may quietly raise prices, while others might hold firm to stay competitive. If you’re planning to buy a 2026 model, keep a close eye on MSRP changes this month, especially for vehicles built overseas.

Should You Buy a Car in August 2025?

If You’re Buying Used:

• Look for aging inventory and high market day supply. That’s where dealers are most flexible.
  
• Arrive prepared to negotiate, or let CarEdge’s AI Negotiator handle it for you.
  
• DIY shoppers should always use CarEdge Pro to know exactly how long a car’s been sitting.
  

If You’re Buying New:

• Shop by deal, not by brand. For example, instead of a Toyota RAV4, look at Mazda, Hyundai, Kia, or other alternatives with stronger incentives and similar reliability.
  
• Consider leasing. With depreciation returning to normal, leasing helps avoid losing 30–50% of value in just three years.
  
• Stack your tools: Negotiation Expert, Concierge, and now the AI Negotiator can save you time and money.

Final Thoughts

August 2025 is shaping up to be a quiet month for the car market. However there are opportunities to drive home a deal if you know where to look. Slipping used car prices are giving buyers more leverage, especially if they’re willing to negotiate. On the new car side, demand is softening, except for electric vehicles, which are seeing renewed interest ahead of looming tax credit changes. 

With high prices and interest rates still in play, the key to success this month is flexibility: consider alternative brands, explore leasing, and be ready to shop the deal, not just the model. If you’re in the market, take advantage of the tools and data available to help you come out ahead. Start your car search with CarEdge today.