Cars For Sale Stock Lot Row. Car Dealer Inventory. Photo: by Mikbiz/Shutterstock
Cox Automotive analysts have predicted since spring that auto sales would get an initial goose from threatened tariffs, but sink later this year as the costs sank in and car prices started to rise.
But later continues to get later.
On Thursday Cox Automotive forecast that August new cars would be sold at a seasonally adjusted annual rate (SAAR) of about 16 million, down slightly compared to July’s 16.4 million pace, but up from last year’s 15.1 million level.
One factor for the continuing strength is the looming Sept. 30 expiration of federal tax credits for electric vehicles, which Cox said it expects will push new-vehicle sales higher in August.
Cox said new car sales in August remained “healthy, as tariff-driven price increases remain muted and sales incentives increase.”
“The new-vehicle sales pace has been surprisingly strong this summer as uncertainty around tariff policy has decreased,” Senior Economist Charlie Chesbrough said.
“So far at least, vehicle price inflation has been relatively tame, and unemployment rates are low,” he said. “Couple that good news with a strong stock market, and there are a lot of consumers who have stayed in a buying mood.”
Chesbrough said the EV effect was already seen in July, which recorded the second-highest EV sales in history.
New EV sales climbed to an estimated 130,082 units in July, up 26% from June and up 20% from a year earlier. Eleven brands posted their best EV sales of the year in July as EV sales incentives were at record highs.
“One of the key contributors to sales gains this summer has been an increase in electric vehicles,” Chesbrough said. “Sales of EVs have risen over the summer in the wake of the Big Beautiful Bill’s passage as buyers rush to market before the $7,500 tax credits expire at the end of September.”
Chesbrough said to look to the fourth quarter for the long predicted end to the forward-buying party as higher prices and tighter inventory weigh on demand.
“Sales pace in the light vehicle market is expected to wane in the coming months,” he said. “Sales of EVs will likely fall dramatically when tax credits expire, and market conditions for other vehicles will become more challenging in future months. More tariffed products are replacing existing inventory, and prices are expected to be pushed slowly higher, leading to softer sales in the coming months.”
And don’t expect much relief if the Fed starts cutting rates in September.
Cox Automotive Chief Economist Jonathan Smoke said Monday that mortgage and auto loan rates follow longer-term Treasury yields like the 10-year Treasury note, which isn’t expected to move much in the near term.
“Auto loan rates are projected to decline gradually as loan performance improves and economic conditions stabilize, with more meaningful relief likely in 2026 or later, rather than in the near term,” Smoke said.
In June, Cox forecast it expects 15.7 million new cars to be sold for the full 12 months of 2025, down 0.6% from 2024. It forecast used car sales to rise about 2% to 38 million this year.
Contact Jim DuPlessis at JDuPlessis@cutimes.com.
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