U.S. auto sales next year expected to be best since 2019

U.S. new vehicle sales are projected to reach their highest level since 2019 next year, driven by lower interest rates and improving affordability, according to industry analysts.

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Cox Automotive forecasts new light-duty vehicle sales to hit 16.3 million in 2025, slightly surpassing projections from S&P Global Mobility and Edmunds, which estimate around 16.2 million units. This would represent an increase from the expected 15.9 million to 16 million sales in 2024, and the best performance since sales reached approximately 17 million in 2019.

The anticipated growth, amounting to a 2.5% increase or less, is attributed to continued normalization of vehicle inventories, rising incentives and discounts from automakers, and easing financing conditions.

“Consumers are still feeling the pinch, but the market has become a slightly friendlier place for car shoppers than it was at the start of the year,” Jessica Caldwell, Edmunds’ head of insights, said in a release on Tuesday.

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Entry-Level Cars on the Rise

A significant portion of the growth is expected to come from entry-level and less expensive vehicles, as the industry continues to grapple with elevated prices and inventory challenges since the pandemic.

Edmunds reports the average transaction price for new vehicles dropped to $47,465 in 2024, down 0.8% from $47,851 in 2023 but still significantly higher than $37,310 in 2019—a 27.2% increase over the period.

Growth in EV Sales

Electrified vehicles, including hybrids, plug-in hybrids, and all-electric models, are expected to remain a major growth segment, according to analysts.

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All-electric vehicle (EV) sales are forecast to set a new record in 2024, with volumes nearing 1.3 million units, according to Cox Automotive. This would represent an 8% market share, slightly up from 7.6% in 2023 but falling short of earlier predictions of 10%.

This growth comes despite a projected year-over-year decline in U.S. EV leader Tesla’s sales—the first since 2014.

“The top three manufacturers are Tesla, Hyundai Motor Group, and General Motors, with GM seeing the largest year-over-year market share increase at 2.7% at the brand level,” said Stephanie Valdez Streaty, Cox’s director of industry insights. “While Tesla’s market share has fallen below 50%, the Model Y and Model 3 continue to dominate, holding the top two spots. However, other models are steadily chipping away at Tesla’s lead.”

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Cox Automotive expects electrified vehicles to account for about 25% of new vehicle sales in 2025, with over 10% coming from all-electric models.

However, analysts cautioned that EV growth could slow if federal consumer credits of up to $7,500 for EV purchases are discontinued. The Trump administration has vowed to eliminate these credits, which could dampen demand.

Tariff Threats and Regulatory Uncertainty

Analysts also warned that regulatory uncertainty ahead of President-elect Donald Trump’s inauguration could impact new vehicle sales in the U.S. Among the key concerns are Trump’s proposed tariffs on vehicle production in Canada and Mexico.

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Cox Automotive’s chief economist, Jonathan Smoke, described the potential 25% tariffs as a “radical disruption” to the U.S. new vehicle market.

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