By MyAutoResource Editorial Team · Reviewed by Steven Sun · 5 min read · Updated August 3, 2026
- December 2025 incentive spending hit 7.5% of average transaction price (ATP), the highest point of the year, even though December’s raw ATP was also the highest of the year.
- January 2026 incentives dropped to 6.5% of ATP, about $3,200 per vehicle, as automakers pulled back to protect margins on the new model year that had just arrived.
- On a $35,000 vehicle, that swing is the difference between roughly $2,625 in average incentive value and $2,275, a $350 gap driven by the calendar alone.
- December’s higher sticker prices come from a heavier mix of luxury and full-size truck buyers, not from smaller discounts, so raw transaction price is the wrong number to judge deal quality by.
In this article
- The Month Everyone Assumes Is Expensive
- The Incentive Swing, Month by Month
- What the Swing Actually Costs You
- Where This Still Has Limits
- Frequently asked questions
Marcus Webb planned to wait until January 2026 to buy his next truck, assuming a new model year on the lot would come with fresh incentives to clear out the old inventory. Cox Automotive’s own new-vehicle pricing data shows the opposite happened. Incentive spending fell from 7.5% of the average transaction price (ATP) in December to 6.5% in January, as automakers pulled back to protect margins on the vehicles that had just arrived.
The Month Everyone Assumes Is Expensive
December looks like the wrong month to buy on paper. Cox Automotive’s Kelley Blue Book report put December 2025’s ATP, the actual average price paid after every discount and incentive, at $50,326, an all-time high for the month, with the average Manufacturer’s Suggested Retail Price (MSRP), the sticker price before any discount, at $52,627. Both numbers are the highest they’d been all year.
But that same report also put December’s incentive spending at 7.5% of ATP, also the highest point of 2025. The two facts aren’t in conflict. December’s higher prices came from what people were buying, not from smaller discounts. Full-size pickup trucks alone generated more than $15 billion in December sales, the report’s analysts noted, and a heavier mix of trucks and luxury vehicles pulls the average price up even while individual discounts stay generous.
The Incentive Swing, Month by Month
Kelley Blue Book publishes this incentive figure every month, and it moves more than most shoppers realize.
| Month | Average transaction price | Average MSRP | Incentives as share of ATP |
|---|---|---|---|
| December 2025 | $50,326 | $52,627 | 7.5% |
| January 2026 | $49,191 | $51,288 | 6.5% |
| May 2026 | $49,220 | $51,595 | 7.1% |
| June 2026 | $49,758 | $51,654 | 7.0% |
The pattern: incentives peaked in December, dropped sharply in January, then drifted back up slightly through spring as 2026 models settled into the lineup. Cox Automotive’s January 2026 report quoted analyst Erin Keating describing the shift as automakers deliberately preserving margin on freshly arrived inventory rather than discounting it the way they discount outgoing models in the final weeks before a model year ends.
What the Swing Actually Costs You
Run the December-to-January swing against a fixed vehicle price instead of the shifting national average, since the national ATP moves with what people buy each month, not just with discount depth. Take a $35,000 new vehicle. At December’s 7.5% average incentive rate, that works out to about $2,625 in incentive value. At January’s 6.5% rate, the same math nets about $2,275. That’s a $350 difference on an identical vehicle, produced entirely by which month the deal closed in.
$350 will not change most people’s decision to buy in a given month on its own. But it’s real money attached to a pattern that repeated in the data every year Kelley Blue Book has tracked it, and it costs a shopper nothing to time a purchase around it if the timing is otherwise flexible. Related reading: how to negotiate the out-the-door price once you’re in the dealership and what to check before buying from a private seller instead of a dealer.
Where This Still Has Limits
This pattern describes a national average, not a guarantee on any specific vehicle. Popular trims in short supply won’t discount the way a slow-selling configuration will, in December or any other month. If a specific vehicle is what you need, availability usually matters more than the calendar. And the incentive swing is a percentage-point shift, not a promise that discounts will land at exactly 7.5% or 6.5% on your deal. Use the pattern to decide when to start shopping seriously, not as a number to hold a dealer to.
Frequently asked questions
Is December really the best month to buy a car? By incentive spending as a share of transaction price, December 2025 was the strongest month of the year at 7.5%, per Cox Automotive data. Raw sticker prices were also higher that month, but that reflects buyer mix, not smaller discounts.
Why was December’s average transaction price the highest of the year if incentives were also highest? Because more buyers of luxury vehicles and full-size trucks, which carry higher prices to begin with, closed deals in December. A heavier mix of expensive vehicles raises the national average price even when individual discounts stay strong.
Does this pattern repeat every year? Cox Automotive’s monthly reports have shown a similar shape in recent years: incentives rise into December, then automakers pull back in January to protect margin on the new model year. The exact percentages shift year to year with inventory and demand.
What about quarter-end or model-year-end timing? Those are separate, well-documented dealer-level pressures tied to sales quotas and clearing outgoing inventory, distinct from the manufacturer-level incentive spending measured here. They can add to savings on specific outgoing models even in months when national incentive spending isn’t at its peak.
How can I check current incentive data myself? Cox Automotive and Kelley Blue Book publish a new ATP and incentive report every month at coxautoinc.com, typically within the first two weeks of the following month.
