US Car Sales Bucked Headwinds to Grow in 2025
By Reuters | 05 Jan, 2026

Carmakers overcame chip shortages and tariff disruptions last year but face tougher economic headwinds in 2026.

Sales of new cars in the United States rose about 2% in 2025, analysts estimate, defying a year of extraordinary disruption for an industry where "black swan" events have become routine.

Automakers confronted supply-chain snarls, unpredictable tariffs and the removal of a $7,500 electric-vehicle tax credit, factors that drove some buyers to dealer lots to snatch vehicles before regulations pushed prices higher. 

“To say it’s been a sales roller coaster of a year would be an understatement,” said Thomas King, president of OEM solutions at J.D. Power. 

Analysts warn that sustaining this growth in 2026 may prove difficult as economic uncertainty and tariff-related costs weigh on consumers.

About 16 million vehicles were sold last year, with gas-powered trucks, SUVs and hybrids fueling demand. Final figures will be released later Monday by automakers including Toyota Motor, General Motors and Hyundai Motor.

While some automakers bumped up prices of models made outside of the U.S., tariffs did not substantially affect vehicle prices, J.D. Power found. The average new-vehicle retail transaction price in December had been expected to reach $47,104, up $715 or 1.5% from December 2024, the firm said.

AFFORDABILITY KEEPS SOME BUYERS AWAY

Still, affordability remained a top barrier for the industry, and executives from Detroit’s auto giants have been called to testify about this at a Senate Commerce Committee hearing on January 14. 

“Many price-sensitive shoppers have been pushed out of the new-vehicle market entirely as elevated monthly payments put ownership out of reach,” said Edmunds’ head of insights Jessica Caldwell.  

Electric vehicles were perhaps the most turbulent part of the market last year. U.S. President Donald Trump axed a hefty consumer tax credit, and championed loosening regulations around fuel economy and emissions. The moves have dampened consumer demand and caused automakers to pull back on plans to produce electric models. 

Sales of EVs are expected to account for 6.6% of retail sales in December, down from 11.2% the prior year, according to J.D. Power. 

Last summer, GM announced it would use some plants to increase production of gas models, instead of the originally intended EVs. The automaker in October took a $1.6 billion charge related to changing its EV plans, and said more charges would be recorded in the fourth quarter.

Ford and Stellantis killed off major EV programs in 2025.

“We had to come up with a better plan," Ford CEO Jim Farley told Reuters, as the automaker said it would take a $19.5 billion hit after canceling the fully-electric version of the F-150 Lightning pickup, as well as a planned next-generation electric truck and van.

MIXED OUTLOOK FOR AUTO SALES 

Analysts remain split on how the auto market will fare in 2026. Cox Automotive said that auto sales would decline 2.4%, as slower economic growth and slashed EV incentives dampen demand. Edmunds expected steady or slightly lower sales this year as tariff-related costs hit and economic uncertainty weighs on consumers.

Meanwhile, analysts note that lowered interest rates would likely buoy demand and more leases would mature, restoring stability in that vital section of the market that was upended by the pandemic.  

“These dynamics set the stage for a more balanced and potentially stronger performance as 2026 progresses,” J.D. Power’s King said.

(Reporting by Nora Eckert; Editing by Mike Colias and Louise Heavens)