Forecasts predict that U.S. auto sales in the upcoming year will be the strongest since 2019.

• The industry's best results since 2019 can be achieved with a year-over-year increase in new auto sales of 2.5% or less, as predicted by S&P Global, Edmunds, and Cox Automotive.
• The expected increase in vehicle sales will be driven by the normalization of vehicle inventories, incentives/discounts from automakers, and the easing of financing and loan rates.
• In 2024, it is predicted that electric vehicle sales in the U.S. will reach another record, with a total sales volume of approximately 1.3 million, according to Cox. This would represent an approximately 8% market share.

According to industry analysts, next year's new vehicle sales in the U.S. are predicted to reach their highest point since 2019, due to lower interest rates and increased affordability.

In 2025, Cox Automotive predicts that new light-duty vehicle sales will reach 16.3 million, slightly higher than the forecasts of S&P Global Mobility and Edmunds, which predict 16.2 million sales next year. This would be an increase from the current expectations of 15.9 million to 16 million sales this year and would mark the highest results since 2019.

A forecasted sales gain in new cars and trucks of 2.5% or less is predicted to result from a normalization of vehicle inventories, incentives/discounts from automakers, and easing financing and loan rates.

Edmunds' head of insights, Jessica Caldwell, stated in a Tuesday release that while consumers are still experiencing financial strain, the car market has become slightly more favorable for shoppers compared to the beginning of the year.

Since the coronavirus pandemic, the industry has been grappling with high prices and low inventories. However, it is predicted that the entry-level and affordable vehicle market will experience significant growth in the future.

In 2024, the average price for new vehicles was $47,465, a 0.8% decrease from $47,851 in 2023, and a 27.2% increase from $37,310 in 2019, according to Edmunds.

EVs

Analysts predict that another growth area for the automotive industry is electrified vehicles, including hybrids, plug-in hybrids, and all-electric models.

In 2024, it is predicted that the U.S. will see another record in all-electric vehicle sales, with a total sales volume of approximately 1.3 million, according to Cox. This would represent an 8% market share, up from 7.6% compared to the previous year, but lower than the earlier expectations of 10%.

Despite a projected decrease in sales for the first time since 2014, the U.S. EV leader remains a leader in the industry.

"According to Stephanie Valdez Streaty, Cox director of industry insights, on Tuesday, the top three manufacturers are Tesla, Hyundai Motor Group, and General Motors, with GM having the largest increase in market share year over year at 2.7% at the brand level. Despite Tesla's market share declining below 50%, the Model Y and Model 3 still hold the top two spots. However, various other models are collectively taking away share from Tesla."

In 2025, Cox anticipates that approximately 25% of new vehicle sales will be electric, with a more than 10% market share for all-electric models.

The Trump administration's plan to eliminate federal consumer credits for purchasing electric vehicles could weaken sales, warned Valdez Streaty and others.

'Radical disruption'?

The regulatory uncertainty prior to President-elect Donald Trump's inauguration may affect new U.S. vehicle sales, particularly due to his tariff threats on vehicle production in Canada and Mexico.

According to Cox Automotive chief economist Jonathan Smoke, tariffs on those countries, as Trump has stated could be 25%, would cause a "radical disruption" to the U.S. new vehicle market.

"We anticipate that policy shifts may bring twists, but we assume that most of these shifts will take time and drive demand forward before they are implemented. Regarding tariffs, we do not assume that major new tariffs will be implemented."

According to Wall Street analysts, the expected increase in U.S. new vehicle sales next year could actually lead to lower earnings for some automakers due to higher incentive rates and an expected decline in pricing.

Colin Langan, a Wells Fargo analyst, stated in an investor note on Monday that there are indications that pricing is not sustainable due to factors such as rising inventories, increasing incentives, falling dealer profits per vehicle, and overall less pricing power for automakers.

Although pricing is still close to its peak, the growth rate has decreased, benefiting car buyers but harming businesses.