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The U.S. automotive market is set to deliver a mixed bag of results as the year progresses. While new-vehicle sales are expected to decline compared to the previous year, recent months show a slight improvement in sales volume. According to the latest forecast from Cox Automotive, December’s sales may reach 15.9 million vehicles, but the total for the year is projected to exceed last year’s figures.
Overall market performance
Estimates from Kelley Blue Book indicate that new-vehicle sales for 2025 will be around 16.3 million, reflecting a year-over-year increase of 1.8%. This positions 2025 as the strongest year for sales since 2019. General Motors is expected to retain its lead as the top automaker in the U.S., with a market share of 17.3%, up from 16.8% the previous year.
Challenges impacting sales
Charlie Chesbrough, a senior economist at Cox Automotive, highlighted that vehicle sales have generally performed well in 2025. However, the fourth quarter has shown a significant slowdown. This decline is attributed to several factors, including tariffs, inflation, and reduced incentives for electric vehicles (EVs). In the early months of 2025, strong demand was evident, driven by a stable stock market and consumers eager to preempt potential price increases.
Market dynamics and fluctuations
The market experienced significant volatility, largely influenced by policies implemented during the Trump administration. These changes created unpredictable sales patterns. Early spring saw a notable surge in sales as consumers rushed to purchase before expected price increases due to announced tariffs. In July, the introduction of the One Big Beautiful Bill Act further accelerated the adoption of electric and plug-in hybrid vehicles, with buyers eager to take advantage of expiring tax credits.
However, the expiration of these tax credits resulted in a sharp decline in electric vehicle sales by the fourth quarter. This decline coincided with a general slowdown in the market, as inventory prices increased due to the ongoing impact of tariffs.
Leading competitors
General Motors is projected to sell over 685,000 vehicles in the fourth quarter, ending the year with a total exceeding 2.8 million units. This marks a year-over-year increase of more than 5%. However, GM’s fourth-quarter performance is expected to decline compared to both last year and the previous quarter, suggesting a potential loss of momentum as the industry heads into 2026.
Toyota has also shown strong performance, with sales anticipated to rise by 8.4% from the previous year. This growth will elevate their market share from 14.5% to 15.5%. A notable trend in 2025 is the consolidation of market power among the top four automakers: GM, Toyota, Ford, and Hyundai. Collectively, they have increased their market share by 2.6 points, while many smaller manufacturers have encountered challenges.
Looking ahead to 2026
Predictions from the Cox Automotive Economic and Industry Insights team indicate a possible decline in vehicle sales to approximately 15.8 million units, marking a 2.4% decrease. This dip is attributed to factors such as slower economic growth, reduced job creation, and the lack of electric vehicle (EV) tax incentives, which are expected to significantly impact the market. Despite the performance of 2025 surpassing many expectations, the outlook for the upcoming year reveals a cooling trend across several critical metrics.
The challenges observed in the fourth quarter, coupled with the anticipated headwinds for 2026, create a complex environment for automakers. As manufacturers navigate these changes, adapting to evolving consumer demands and market conditions will be essential in the months ahead.