April New Car Sales Down 7.3% — But Here's Why Leasing Is Making a Comeback

A 7.3% drop in new car sales sounds alarming — until you understand the context. Last April, an extra 53,000 buyers rushed to dealerships in anticipation of tariff-driven price increases, inflating last year's numbers artificially. When you strip that out, demand remains healthy. The seasonally adjusted annualized rate is holding near 16 million units, close to last year's full-year average.

The Real Story: Negative Equity Is Squeezing Buyers

The number that matters more than the sales figure is this: nearly one in three trade-ins currently carries negative equity. Buyers who purchased at peak prices in 2021–2022 are coming back to market and finding they owe more than their car is worth. That gap is getting rolled into new deals — which is why the average monthly payment has risen to $812/month even though vehicle prices and interest rates have barely moved.

This is exactly why running your numbers before you walk into a dealership matters. If you're trading in a vehicle, ask for your payoff amount first. Then use DMVCalc to see what your payment looks like with and without rolling in negative equity.

Manufacturers Are Fighting Back With Incentives

The good news: automakers are spending more to close deals. Average incentive spending is up nearly 11% to around $3,100 per vehicle. On EVs, manufacturers are spending an average of over $10,000 per vehicle in incentives — nearly 3.5 times what they're spending on gas-powered cars. For buyers considering an EV, this is one of the best windows in recent memory.

Leasing Is Back — and It Makes Sense Right Now

Nearly 1 in 4 new vehicle buyers chose to lease in April — the highest leasing rate in years. When negative equity is a concern and incentives are elevated, leasing sidesteps both problems. You avoid building equity in a depreciating asset, you capture manufacturer support through money factor buydowns, and you walk away after 36–39 months without worrying about trade-in value.

If you're in the DMV area and considering a luxury lease, use the Lease tab in DMVCalc to see what your payment looks like with current money factors and residuals.