2025 US auto sales are expected to be the best since 2019

DETROIT – U.S. new car sales are expected to grow next year to their highest level since 2019, led by low interest rates and improving affordability, according to industry analysts.

Cox Automotive expects new light-duty vehicle sales to reach 16.3 million in 2025, slightly higher than forecasts by S&P Global Mobility and Edmunds of about 16.2 million sales next year. Such sales would rise from expectations of 15.9 million to 16 million this year and mark the highest result since about 17 million in 2019.

That would equate to 2.5% or less of forecast sales gains for new cars and trucks. The increase is expected to be due to continued “normalization” of vehicle inventory, incentives/discounts from automakers and easing financing and lending rates.

“Consumers are still feeling the pinch, but the market has become a bit friendlier for car buyers since the beginning of the year,” Jessica Caldwell, head of insights at Edmunds, said in a release Tuesday.

One of the biggest growth markets is expected to be entry-level and less expensive vehicles. The industry has been dealing with high prices and low inventory for years since the coronavirus pandemic.

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

Another expected growth area is electrified vehicles, including hybrids, plug-in hybrids and all-electric models, according to analysts.

According to Cox, sales of all-electric vehicles in the U.S. are forecast to set another record in 2024, with total sales approaching 1.3 million. That would mark a roughly 8% market share, up from 7.6% last year but lower than expectations of 10% earlier this year.

This is despite a predicted year-over-year decline in the US EV leader TeslaIts first sale since 2014.

“The top three manufacturers are Tesla, Hyundai Motor Group and General Motors, with GM’s market share growing the most at the brand level at 2.7% year over year. While Tesla’s market share has fallen below 50%, the Model Y and Model 3 hold the top two spots. is going to keep,” said Stephanie Valdez Streti, Cox director of industry insights. “The other models are collectively taking share away from Tesla.”

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

Valdez-Stretti and others warned that EV sales could weaken if the federal consumer credit for vehicle purchases of up to $7,500 ends, which the Trump administration has promised to kill.

Analysts have warned that regulatory uncertainty ahead of President-elect Donald Trump’s inauguration could affect US new car sales. Most notably, Trump’s tariff threats could affect car production in Canada and Mexico.

Jonathan Smoak, chief economist at Cox Automotive, said the tariffs on those countries, which Trump has said could be as high as 25%, would be “a radical disruption” to the US new car market.

“We know that there may be some twists and turns with policy changes, but some of the key assumptions that we’re making are that most of the shifts will take time, and before they’re implemented, demand will actually likely increase. There’s going to be a pull forward,” Smoke said during a virtual briefing Tuesday. “As it relates to tariffs, in particular, we are not making any assumptions that major new tariffs will be implemented.”

An expected increase in US new car sales could actually be a headwind for some automakers’ earnings due to higher stimulus rates and an expected drop in prices, according to Wall Street analysts.

“We’re seeing signs that pricing is unsustainable,” Wells Fargo analyst Colin Langan said in an investor note on Monday, citing rising inventory, rising incentives, declining dealer profits per vehicle and other overall lower pricing power for automakers.

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