U.S. auto sales expected to be best since 2019 in 2025

A for sale sign is seen at the Serramonte Subaru car dealership in Colma, California.

Stephen Lam | Reuters

DETROIT New vehicle sales in the United States are expected to reach their highest level since 2019 next year, thanks to falling interest rates and improving affordability, industry analysts say.

Cox Automotive expects new light vehicle sales to reach 16.3 million in 2025, slightly higher than S&P Global Mobility and Edmunds' forecast of about 16.2 million sales next year. Those sales would rise from expectations of 15.9 million to 16 million this year and mark the highest results since around 17 million in 2019.

This would equate to a projected increase in new car and truck sales of 2.5% or less. This increase is expected to be fueled by continued “normalization” of vehicle inventories, incentives/reductions from automakers, and easing of financing and lending rates.

“Consumers are still feeling the pain, but the market has become a slightly friendlier place for car buyers than it was earlier in the year,” Jessica Caldwell, Edmunds' chief research officer, said in a press release published Tuesday.

One of the biggest growth markets is expected to be entry-level and cheaper vehicles. The industry has faced years of high prices and falling inventory since the coronavirus pandemic.

Edmunds reports that the average transaction price for new vehicles was $47,465 in 2024, a decrease of 0.8% from $47,851 in 2023 and an increase of 27.2% from $37,310 in 2019.

EV

Another expected area of ​​growth remains electrified vehicles, including hybrid, plug-in hybrid and fully electric models, according to analysts.

Sales of fully electric vehicles in the United States are expected to set a new record in 2024, with total sales volume near 1.3 million, according to Cox. That would represent about 8% market share, up from 7.6% from last year, but lower than expectations of 10% earlier this year.

This is despite a predicted year-on-year decline in sales of US electric vehicle leader Tesla for the first time since 2014.

“The top three manufacturers are Tesla, Hyundai Motor Group and General Motors, with GM having the largest year-over-year market share increase of 2.7% at the brand level. Even though Tesla's market share has fallen below 50%, the Model Y and Model 3 continue to hold the top two spots,” Stephanie Valdez Streaty, Cox's director of industry research, said Tuesday. “Various others models are collectively taking away shares from Tesla.”

Cox expects about 25% of new vehicle sales to be electrified in 2025, including more than 10% penetration for fully electric models.

Valdez Streaty and others have warned that electric vehicle sales could be lower if federal consumer credits for vehicle purchases of up to $7,500 are eliminated, which the Trump administration has promised to eliminate .

“Radical disruption”?

Analysts have warned that regulatory uncertainty ahead of President-elect Donald Trump's inauguration could impact new vehicle sales in the United States. Most notably, Trump's tariff threats could affect vehicle production in Canada and Mexico.

Cox Automotive chief economist Jonathan Smoke said tariffs on those countries, which Trump said could reach 25 percent, would be “a radical disruption” to the U.S. new vehicle market.

United States President-elect Donald Trump delivers a speech at Mar-a-Lago in Palm Beach, Florida, United States, December 16, 2024.

Brian Snyder | Reuters

“We know that policy changes could lead to twists and turns, but some key assumptions we are making are that most of these changes are likely to take time and that before they are implemented they are likely to stimulate demand. Smoke said Tuesday during a virtual briefing. “Regarding tariffs in particular, we do not assume that any major new tariffs will be implemented.”

The expected increase in new vehicle sales in the United States could actually be counterintuitive for some automakers' profits next year due to higher incentive rates and an expected drop in prices, according to Wall Street analysts.

“We continue to see signs that prices are not sustainable,” Colin Langan, an analyst at Wells Fargo, said in a note to investors Monday, citing rising inventories, increasing incentives, falling profits. dealers per vehicle and other factors overall lower pricing power for automakers.

Prices remain near record highs, but growth has slowed, which is good for car buyers but bad for businesses.

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