Nora Eckert
DETROIT, Jan 5 (Reuters) – Analysts estimate that U.S. new car sales will grow about 2% in 2025, despite an unusual year of disruption for an industry that has become accustomed to “black swan” events.
Automakers face supply chain disruptions, unpredictable tariffs and the elimination of a $7,500 electric vehicle tax credit, factors that have prompted some buyers to rush to dealerships to snap up vehicles before regulations drive up prices.
“To say sales have been a rollercoaster this year would be an understatement,” said Thomas King, president of JD Power OEM Solutions.
Analysts warn that sustaining this growth could be difficult in 2026 as economic uncertainty and tariff-related costs weigh on consumers.
About 16 million vehicles were sold last year, with gasoline-powered trucks, SUVs and hybrids seeing strong demand. Automakers including Toyota Motor Corp, General Motors Co and Hyundai Motor Co will release final figures later on Monday.
JD Power found that the tariffs have not had a material impact on vehicle prices, although some automakers have raised prices on models built outside the United States. The average retail transaction price of new vehicles in December is expected to be $47,104, an increase of $715, or 1.5%, from December 2024, the company said.
Affordability deters some buyers
Still, affordability remains the industry’s biggest hurdle, and executives from the Detroit auto giant have been subpoenaed to testify about it at a Jan. 14 Senate Commerce Committee hearing.
“Many price-conscious shoppers are being priced out of the new car market entirely as rising monthly payments put car ownership out of reach,” said Jessica Caldwell, director of insights at Edmunds.
Electric vehicles were probably the most volatile segment of the market last year. U.S. President Donald Trump has eliminated huge consumer tax credits and backed loosening regulations on fuel economy and emissions. The moves have dampened consumer demand and caused automakers to cancel plans to produce electric models.
According to data from JD Power, electric vehicle sales are expected to account for 6.6% of retail sales in December, down from 11.2% in the same period last year.
Last summer, GM announced it would use some plants to increase production of gasoline models instead of electric vehicles as originally planned. The automaker took a $1.6 billion charge in October for changes to its electric vehicle plans and said it would take more charges in the fourth quarter.
Ford and Stellantis cancel major electric vehicle projects in 2025.
“We have to plan better,” Ford Chief Executive Jim Farley told Reuters. The automaker said it would take a $19.5 billion hit after canceling an all-electric version of its F-150 Lightning pickup truck and a planned next-generation electric truck and van.
Car sales outlook mixed
Analysts remain divided on the direction of the auto market in 2026. Cox Automotive said auto sales would fall 2.4% as slowing economic growth and cuts in incentives for electric vehicles dampen demand. Edmunds expects sales to be stable or slightly down this year as tariff-related costs hit consumers and economic uncertainty weighs on consumers.
At the same time, analysts note that lower interest rates are likely to boost demand and more leasing will mature, restoring stability to a significant part of the market disrupted by the pandemic.
“These dynamics set the stage for more balanced and potentially stronger results as 2026 progresses,” JD Power’s King said.
(Reporting by Nora Eckert; Editing by Mike Kollias and Louis Paradise)
