Automakers got to celebrate a bit in March as new vehicle sales jumped 10.7% compared to year-ago numbers. However, that celebration is likely to be short-lived, if the assertions in a new report prove true. The tome authored by Telemetry’s Sam Abuelsamid predicts sales will fall 1.8 million units in 2025 and the next several years don’t look much better.
New vehicle sales rose in March as consumers looked to beat tariff-induced price increases.
Not only did the automakers enjoy a strong result compared to last March, new vehicle sales jumped 29.9% over February, which was a good month too. The March SAAR increased 11.0% to 17.7 million, up 13.3% from last year’s 15.7 million and up from February’s 16.0 million.
The good news for consumers in all this is that the average transaction price for a new car, truck or utility vehicle fell slightly compared to February, falling to $47,448. While it’s not a massive decline, any drop is good news for car buyers, especially since incentives slid just a bit too — although they were up 4.6% compared to last March at $3,319.
Why the jump?
The new Trump tariffs are expected to impact the price of new vehicles sold in the U.S., wherever they are manufactured.
Automakers can thank President Donald Trump for the strong March sales as consumers raced to dealers looking to get the vehicle they wanted and would likely be impacted by the administration’s newly implemented tariffs.
Data analytics firmer Cloud Theory estimates the move accelerated sales of 153,000 vehicles to March. New vehicle movement jumped 38% month-over-month, from approximately 960,000 units in February to 1.31 million units in March. While some gains were attributable to seasonality and tax refunds, a significant portion was related to consumer tariff concerns.
“Consumers are well aware of the risks that these tariffs pose in terms of future cost hikes, with price increases potentially moving from in the hundreds of dollars to the thousands,” said Rick Wainschel, vice president of Data Science and Analytics for Cloud Theory.
“Consumers, in anticipation of these higher prices, rushed to buy new vehicles in the current period. While this provided a boost in the short run, the ‘pull ahead’ effect of these accelerated sales runs the risk of leading to a hangover effect that depresses results going forward.”
More Sales News
- U.S. Car Sales Soar in March as Buyers Raced to Beat Trump Tariffs
- March Auto Sales Look Strong — But Affordability Remains an Issue
- EV Sales Take Off in Fourth Quarter to Set New Records
What’s next?
By pulling ahead those sales, automakers will struggle to find ways to get them back, especially if prices go up due to the 25% tariffs as predicted by multiple analysts. The prediction is that they’ll rise between $3,000 and $10,000 depending upon the type of vehicle.
New vehicle sales rose in March even though incentive levels fell slightly.
Abuelsamid believes this and other factors will drive sales down by 1.8 million vehicles in 2025 with more bad news to come in the years ahead. “Vehicle affordability is already a major issue for consumers,” Abuelsamid, who is vice president of insights at Telemetry, told Reuters.
The tariffs could set off a cycle that crushes industry sales despite efforts already being instituted by automakers to counteract the looming levies.
“With sales going down, you’re going to have layoffs,” Abuelsamid said. “And even to the degree that some production shifts to the U.S., it’s not going to be enough to offset the lost employment from higher costs and lower sales.”
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