New car lot.
Cox Automotive on Thursday raised its forecast for car sales this year because demand has been stronger and constraints from tariffs have been weaker than it expected last spring.
“It's not so bad,” Chief Economist Jonathan Smoke said. “We've ended up with a stronger than expected economy and auto market so far. 2025 and the future look a lot better now than they did just a few months ago.”
Cox Automotive said it now expects U.S. sales will reach 16.1 million this year, up 2% from 2024. The forecast is closer to the 16.3 million it predicted last December, but up significantly from the range of 15.6 million to 15.7 million it had held since March.
It forecast total used car sales will reach 38.3 million this year, up 2.7% from 2024. The forecast has been rising from 37.8 million in its December and March forecasts and 38 million in June.
The picture for total sales looks a little better than retail sales at dealerships. Retail sales exclude private used car sales and fleet sales of new cars — neither of which is likely to generate a credit union loan.
Retail sales of new cars are expected to be 13.1 million, up 1.9% from 2024. It had forecast 13.3 million in December and March, and 13 million in June.
Retail sales of used cars are expected to be 20.3 million, up 2% from 2024. The previous three forecasts had expected 20.1 million.
Cox Automotive lowered forecasts in the spring because the size and breadth of tariffs announced by President Trump, which were expected to raise car prices and stifle demand.
Instead, sales were goosed by the lag between the announcement and the dates the tariffs were expected to go into effect. In the third quarter, they were boosted by a spike in electric vehicle sales as buyers tried to take advantage of federal incentives that expire Sept. 30.
Smoke said car sales are getting the benefit of falling interest rates, lower taxes and laxer regulation. Yet, Cox Automotive also estimated the government will collect $100 billion this year in tariffs on cars and car parts.
“Tariffs are real and we believe here to stay,” Smoke said.
“Prices will rise, and volumes will decline, but in the near term demand has been robust with an added kicker in Q3 from the expiration of EV tax credits at the end of this quarter,” he said. “That boost will soon fade and expiring credits and easing regulations will lead to definite cuts in the near term for EV models.”
Contact Jim DuPlessis at JDuPlessis@cutimes.com.
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