New Vehicle Inventory Falls, Prices Rise As Manufacturers, Dealers Brace for Challenging Q3, According to Cloud Theory’s Q2 “On the Horizon” Report

, /PRNewswire/ — Pull-ahead demand in Q2 2025 pushed new vehicle sales to a monthly average of 1.17 million, up from 1.08 million in Q1 2025, according to automotive data analytics firm Cloud Theory. However, as vehicle inventory shrinks and prices rise, the automotive industry could be in for a challenging Q3. The findings are part of Cloud Theory’s quarterly automotive industry report “On the Horizon” (Q2 2025 On the Horizon) released today.

The last two quarters have seen consecutive steps down in overall inventory position, with more vehicles moved than inventory added. This dynamic began to take hold in March, when consumers first accelerated their purchases ahead of anticipated tariff-related price increases. In the last four months, it is estimated that almost half a million vehicle sales were “pull-ahead” purchases, which led to the depletion of inventory to levels below 3MM throughout Q2 2025.

“The pull-ahead effect of tariff-related pricing increases that began in March extended into Q2, but the aftereffects of those accelerated purchases are looming,” said Rick Wainschel, Vice President of Data Science and Analytics for Cloud Theory. “And with an expanding range of OEMs taking pricing actions (or signaling a likelihood to do so), this summer poses significant risks to the industry’s current momentum as the anticipation of hikes meets the reality of them.”

The last two quarters have seen consecutive dips in vehicle inventory, with more vehicles moved than inventory added. This dynamic began to take hold in March, when consumers first accelerated their purchases ahead of anticipated tariff-related price increases. In the last four months, an estimated 500,000 new vehicle sales were “pull-ahead” purchases, which led to the depletion of inventory to levels below 3 million throughout Q2 2025.

In Q4 2024, inventory averaged 3.27 million units but fell to 3.07 million in Q1 2025 and 2.84 million in Q2 2025. As supply has fallen, the average new vehicle price has slowly risen, going from $49,236 in Q1 2025 to $49,713 in Q2 2025. This $477 increase masks an even more pronounced rise in prices, as manufacturers are building more lower-priced inventory, which is pulling the overall average downward.

Manufacturers are reacting to rising prices by building more lower-priced inventory. Inventory shifts towards lower priced Midsize and Small SUVs—and away from Full Size Trucks and XL SUVs—have resulted in a recent reduction (-$202) in overall Average Marketed Price in the latter half of June. Had the segment mix stayed the same, however, prices would have increased by $223 over that timeframe.

In other findings:

After six months at levels in the low-to-mid 30s, the turn rate in Q2 exceeded 40% as vehicle movement ramped up and inventory positions degraded over time.
Relatedly, days-to-move dropped from 80 in Q1 2025 to 71 in the current quarter.
Market adjustments, which measure the discounts and incentives visible to consumers on dealer websites, became more aggressive in Q2, exceeding $2,000—an increase of almost $600 from year-ago levels.

About Cloud Theory

Cloud Theory is more than a concept. It is the eye of the storm, where cutting-edge data, software, and artificial intelligence meet deep industry knowledge and experience. Built for automotive manufacturers, agencies, and affiliates, Cloud Theory enables our customers to understand – in real time – the complex competitive world in which they do business and to make bold decisions that drive them forward. The combination of billions of data points, interactive tools, and expert consulting gives our clients the ability to weather any storm and find their way to clear blue skies. Learn more at cloudtheory.ai. To learn more about our entire portfolio of automotive brands, visit www.advancelocalautomotive.com.

About Advance Automotive

Created in 2017, Advance Automotive is a portfolio of automotive, technology, marketing, data, and software businesses providing AI-driven marketing solutions in the automotive industry. Advance Automotive includes independently operated agencies, ZeroSum, Adpearance, and Search Optics, as well as affiliate solutions from Cloud Theory and Hoot Interactive. Advance Automotive is part of Advance Local, a key unit of Advance, a privately held company founded in 1922.

Advance’s portfolio of exceptional companies includes: