Under Weight of War, Rising Economic Fears, U.S. Auto Sales Could Be Heading for a Crash

U.S. auto sales tumbled sharply in March reflecting growing consumer concerns about record vehicle prices, surging fuel costs and broader worries about the health of the economy. There was one unexpected positive note, however. Headlight.News explains.

The U.S. auto market tumbled by double digits during March as a variety of headwinds leave the industry facing what analyst Sam Fiorani described as “unprecedented” challenges.

While some manufacturers tried to find something positive to say about the downbeat numbers, there were few silver linings as the industry struggled to draw increasingly nervous consumers into U.S. showrooms.

The year began with vehicle prices surging to record levels, Fiorani and other analysts warning this could drive millions of potential buyers out of the market. But the headwinds have only accelerated as the Iran War sends fuel prices soaring and, without any clear end in sight, could contribute to a broader surge in inflation.

Double-digit downturn

March numbers were down by more 11% Among the dozen brands that have already weighed in for the month, a list that included Toyota, Ford, General Motors and Hyundai. If there was a positive note, that was not quite as bad as results for March, when the same group of manufacturers reported a decline of just over 4%, according to data tracked by Automotive News.

“We saw showroom traffic and sales steadily improve during the quarter and March was a much stronger month,” said Duncan Aldred, president of GM North America.

But the mood was far less upbeat than typical among manufacturers gathered at the New York International Auto Show on Wednesday for the annual media preview. The event normally marks a high point for the industry as carmakers roll out promising new products. But officials from Toyota, Hyundai, Kia and other brands all expressed caution about where the market is heading as spring finally begins to deliver warmth after a winter fell of record low temperatures and heavy snows.

Snowed under

There’s no question this past winter had a big impact on the market, consumers in many parts of the country limiting travel as devastating storms rolled across the country. Often, that convinces motorists its time to trade in once the weather improves. And that may be why demand picked up slightly in March, several experts suggested.

On the other hand, there remain, quite literally, plenty of other headwinds roiling the car market. That starts with vehicle prices – the average model rolling off dealers lots for slightly more than $50,000 in March, according to Cox Automotive. The Atlanta-based group warned that as much as a third of Americans no longer can afford new vehicles. Only about 37% of those with household incomes of under $100,000 are able to work a new model into their budgets.

The numbers are being further strained by rising gas prices. After topping $4 a gallon on Monday – for the first time since August 2022 – the cost of self-serve regular shot to a nationwide average of $4.077 on Thursday morning, reported GasBuddy.com. That’s up by more than $1 since the U.S. and Israel began bombing Iran on February 28. And some experts tracking the oil industry warn we could yet see $5 gas. The petro market appears to have responded poorly to the nationwide address by Pres. Donald Trump Wednesday night after he failed to set a clear set of goals or a timeframe for ending the war.

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Winners and losers

Among manufacturers who’ve so far reported their latest sales numbers, Mazda posted the biggest decline, down 25.7% in March and 14.4% for the first quarter. Subaru was down 23.5% for the month, 15% for the quarter. Among U.S. manufacturers, Ford posted a 13.8% decline last month, and was off 8.7% during the three-month period.

American Honda, Hyundai Motor Group, Toyota and General Motors all reported year-over-year downturns, as well, though a handful of individual brands did show some strength during the quarter. That included luxury marques Acura and Genesis. Nissan tried to put a positive spin on things by noting it gained market share during the first quarter – but only because it has less of a sales decline than the industry overall.

Stellantis was one of the rare manufacturers to land in positive territory, up 4.1% for the first quarter. Its two biggest brands, Jeep and Ram, reported sales gains of 2.8% and 20%, respectively. The little Fiat brand was up 70%. But those improvements come on top of the sharp downturn the automaker faced during 2024 through the first half of 2025.

Electrifying market demand

Another clear winner was Kia which reported a 4.1% sales gain for the first quarter – though it was down 2.6% for March. Still, Kia officials were particularly upbeat hitting that quarterly record and marketing chief Russell Wagers gave much of the credit to the Korean marque’s electrified product line-up. Its hybrids, in particular, were up 73% year-over-year.

Gas-electric vehicle sales were expected to account for fully one in five new vehicle sales for the quarter, according to Cox, up from about 11% for all of 2025. The surge reflects several factors, including both a desire by consumers to reduce fuel costs and growing availability of electrified products. Excluding its EVs, 16 of 18 Toyota products in the U.S. have hybrid powertrains, whether as options or standard features.

Hybrids were the “number one source of growth for us last year,” said Jose Munoz, head of the Hyundai Motor Group operations in the U.S.

But Munoz, Wagers and several other executives gathered in New York told Headlight.News that their dealers are also seeing resurgent interest in battery-electric vehicles after demand fell off last year following the phase out of federal tax credits.