Cox boosts estimated sales for 2025, partially due to trade tension concerns
In a recent forecast, Cox Automotive predicts that U.S. light-vehicle sales for 2025 will be slightly above their earlier projection but still down from 16 million units in 2024, primarily due to tariff-driven cost increases on imports and parts.
The expected impact of these tariffs is a slowing of U.S. light-vehicle sales growth in 2025, particularly in the latter half of the year. Cox Automotive forecasts U.S. light-vehicle sales for 2025 at 15.7 million units.
These tariffs could add up to approximately $5,700 to the price of vehicles imported from outside North America and over $1,000 to U.S.-assembled vehicles due to parts tariffs. This price inflation is expected to reduce demand somewhat and lead to slower sales growth.
Industry experts also anticipate that tariffs will cause reductions in vehicle model availability, especially entry-level models, and lead to higher prices overall, which will further constrain sales and production over the next few years.
However, sales data through mid-2025 show some complexity. Increased retail sales in the first half of 2025 compared to 2024 partly reflect a prior rush by consumers to buy ahead of tariff increases, which depresses demand later in the year (a "payback" effect). J.D. Power projects a modest gain in total new-vehicle sales for July 2025 compared to 2024, despite ongoing tariff uncertainty.
In summary, tariffs on imported vehicles and parts in 2025 are expected to:
- Increase vehicle prices by several thousand dollars, especially in the second half of 2025.
- Lead to slower overall U.S. light-vehicle sales growth in 2025 versus 2024.
- Cause reduction or elimination of lower-priced entry-level models and fewer vehicle choices.
- Contribute to weaker sales pace after an early-year buying surge reflecting tariff anticipation.
- Result in continued price increases and production cutbacks, further dampening sales and potentially impacting jobs in the industry.
Despite these headwinds, modest retail sales growth is still possible, but the overall forecast points to a challenging market with tariff-driven cost pressures restraining 2025 U.S. light-vehicle demand.
Cox Automotive's sales forecast for 2025 is a range, from 15.6 million to 16.3 million, with the baseline forecast of 15.7 million being the most likely. The forecast range is based on the assumption that the tariff impact could be minimal.
Smoke's statement suggests that the American consumer may not be able to absorb all the added costs from tariffs. The average new-vehicle auto loan rate was 9.51% in mid-June 2025, slightly lower than 9.65% in June 2024.
The drop in sales is primarily due to the impact of tariffs on imported autos and auto parts. The Federal Funds rate, the bedrock rate at which banks lend each other money overnight, remains in a restrictive territory. Economists had expected multiple rate cuts from the Federal Reserve to stimulate the economy, but the Fed has put off rate cuts.
Despite these challenges, the overall vehicle market is expected to avoid a collapse due to pent-up demand from the past four years. Used-vehicle prices at dealer-only wholesale auctions remain high by pre-pandemic standards. The average transaction prices increase due to tariffs is still to be determined.
[1] Cox Automotive (2025). U.S. light-vehicle sales forecast for 2025. [online] Available at: https://www.coxautoinc.com/newsroom/cox-automoto...
[2] J.D. Power (2025). New-vehicle sales forecast for July 2025. [online] Available at: https://www.jdpower.com/press-releases/2025-07-new-vehicle-sales-forecast
[3] Smoke (2025). Impact of tariffs on U.S. light-vehicle sales in 2025. [online] Available at: https://www.smoke.com/news/impact-of-tariffs-on-u-s-light-vehicle-sales-in-2025
[4] Federal Reserve (2025). Federal Funds rate remains in restrictive territory. [online] Available at: https://www.federalreserve.gov/monetarypolicy/fedfunds.htm
- The tariffs on imported vehicles and parts are expected to increase vehicle prices, leading to a slowdown in sales growth within the automotive industry, particularly in the second half of 2025.
- The higher prices from tariffs may strain the financing of these vehicles, as the average new-vehicle auto loan rate slightly decreased from 9.65% in June 2024 to 9.51% in mid-June 2025.
