New car sales in the United States increased by about 2% in 2025, defying widespread panic over potential negative impacts from President Trump’s tariffs, according to recent analysis.
While the White House has claimed that Trump’s policies would lead to higher prices benefiting the auto industry, many manufacturers have delayed passing the full burden of these tariffs onto consumers. Analysts caution that this could impact sales as the year progresses.
“Most auto sales metrics for 2025 were slightly stronger than we anticipated, even more than our own forecasts,” said Cox Automotive’s interim chief economist, Jeremy Robb, in a statement.
About 16.2 million new vehicles are projected to be sold this year in the U.S., marking a 2.2% rise from 2024. This growth is largely attributed to a strong demand for gasoline trucks, SUVs, and hybrid models.
However, Cox Automotive remains cautious, forecasting a 2.4% decline in auto sales going forward. Edmunds anticipates that 2026 sales may remain flat or even fall.
“While 2025 was better than expected for many indicators, the outlook for 2026 suggests we could see a slowdown,” Cox noted.
Pricing Concerns
Last month, the average retail price for a new vehicle reached approximately $47,104, which is a 1.5% increase, or about $715, compared to December 2024. Kelly Blue Book indicated a slight decrease in average vehicle prices to $49,740, down from October’s peak of $50,080.
High prices have resulted in some cancellations of sales and increased payment delinquencies as consumers grapple with ongoing economic uncertainties.
Despite this, companies like General Motors, Lexus, and Toyota have reported annual sales growths of 5.5%, 7%, and 8%, respectively, in the U.S.
Hyundai had a record year in sales, while Ford announced its strongest sales figures since 2019. Stellantis reported a modest 3.3% decline, although its Jeep brand showed sales growth for the first time since 2018.
White House’s Reaction
The White House expressed a sense of triumph on Tuesday, countering fears surrounding the tariffs’ impact.
“Those ‘experts’ were completely mistaken,” they asserted. “Car manufacturers are thriving.”
This commentary highlighted Trump’s initiatives aimed at the auto sector, such as tax credits for auto loan interest, relaxed fuel economy standards, and substantial investments in domestic manufacturing to avert tariffs.
Following the termination of the $7,500 federal tax credit for electric vehicles, which ended last September, some automakers shifted away from planned EV production in the U.S. Analysts observed that the surge in EV sales earlier in 2024 was partly due to buyers rushing to take advantage of the tax credit before its expiration.
General Motors announced last summer that it would redirect certain factories intended for EVs to boost gasoline model production, which brought about a $1.6 billion expense, projected to increase further.
Similarly, Stellantis and Ford rapidly abandoned their costly EV plans, with Ford predicting a $19.5 billion setback if it halted its all-electric F-150 Lightning and new electric models.
“We had to devise a better strategy,” said Ford CEO Jim Farley.
Future Challenges in 2026
As some manufacturers begin to pass the cost of tariffs on to buyers, Toyota has so far absorbed these additional expenses. However, executives have indicated that they can’t sustain this for much longer and expect prices to rise, potentially affecting next year’s sales.
About 23% of Toyota’s vehicles come from Japan, currently facing a 15% tariff, while imports from Mexico and Canada, subject to a 25% tariff, represent around 28% of their sales.
Andrew Gilleland, senior vice president of automotive operations, commented that the company is approaching its limits in shifting more production to the U.S.
“Manufacturers are trying to find ways to tweak their operations to gain another 1-2%, but we’re nearly at capacity,” he stated.
“It’s unrealistic to keep prices unchanged with a 15% tariff. Any brand would struggle to absorb that, given the low margins on vehicles,” added Dave Christ, head of Toyota’s U.S. division.
