A sale sign hangs on the Serramonte Subaru car dealership in Colma, California.
Lin Zhiwei | Reuters
DETROIT — U.S. new car sales next year are expected to rise to their highest level since 2019, driven by falling interest rates and improving affordability, industry analysts say.
Cox Automotive expects new light-vehicle sales to reach 16.3 million units in 2025, slightly ahead of S&P Global Mobility and Edmunds forecasts of about 16.2 million units next year. Sales would be higher than the 15.9 million to 16 million expected this year and a record since About 17 million in 2019.
This equates to a projected sales increase of 2.5% or less for new cars and trucks. This growth is expected to be driven by continued “normalization” of auto inventories, incentives/discounts from automakers, and easy financing and loan rates.
“Consumers are still feeling the pinch, but the market has become slightly friendlier to car buyers than it was at the beginning of the year,” Jessica Caldwell, Edmunds’ director of insights, said in a press release Tuesday.
One of the largest growth markets is expected to be entry-level and less expensive vehicles. The industry has been responding to years of price increases Inventories have fallen since the coronavirus pandemic.
Edmonds Report The average transaction price of a new car in 2024 is $47,465, down 0.8% from $47,851 in 2023 and up 27.2% from $37,310 in 2019.
electric car
Another area of expected growth remains electric vehicles, including hybrid, plug-in hybrid and all-electric models, analysts said.
Cox said that U.S. pure electric vehicle sales are expected to reach a new high in 2024, with total sales approaching 1.3 million vehicles. That would mean a market share of about 8%, up from 7.6% last year but below expectations of 10% earlier this year.
Even though U.S. EV leader sales are expected to decline year-on-year TeslaSales increased for the first time since 2014.
“The top three manufacturers are Tesla, Hyundai Motor Group and General Motors. General Motors’ market share at the brand level has the largest annual increase, reaching 2.7%. Although Tesla’s market share has fallen below 50%, But Model Y and Model 3 continue to occupy the top two spots,” Stephanie Valdez Streaty, director of industry insights at Cox, said on Tuesday. “A variety of other models are collectively taking Tesla’s market share.”
Cox predicts that by 2025, about 25% of new car sales will be electrified, with the penetration rate of all-electric models exceeding 10%.
Valdez Streaty and others warn that electric vehicle sales could weaken if the Trump administration ends federal consumer credit for purchases of vehicles under $7,500. swear to kill.
“Total disruption”?
Analysts warn of regulatory uncertainty ahead of president-elect Donald Trump‘s inauguration could impact U.S. new car sales. Most notably, Trump’s tariff threats Auto production in Canada and Mexico could be affected.
Jonathan Smoke, chief economist at Cox Automotive, said tariffs on these countries, which Trump said could be 25%, would cause “complete disruption” to the U.S. new car market.
US President-elect Donald Trump delivers a speech at Mar-a-Lago in Palm Beach, Florida, USA on December 16, 2024.
Brian Snyder | Reuters
“We know that policy shifts may come with some twists and turns, but some of the key assumptions we make are that most of these shifts are likely to take time and may actually push demand forward before they are implemented,” Smoak said. Two said during a virtual briefing. “Specifically, as it relates to tariffs, we are not making any assumptions that significant new tariffs will be implemented.”
Wall Street analysts say the expected growth in U.S. new-vehicle sales may actually be counterintuitive to some automakers’ earnings next year due to higher incentive rates and expected pricing declines.
“We continue to see signs that pricing is unsustainable,” Wells Fargo analyst Colin Langan said in an investor note on Monday, citing rising inventory, increased incentives, dealers’ per-vehicle Declining profits and reduced overall pricing power of automakers.
Prices remain near record highs, but growth is slowing, which is good for car buyers but bad for businesses.
