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The US new-vehicle sales market is expected to show a steady yet mildly slower pace in May 2025 compared to the strong sales recorded in March and April. According to industry forecasts, new-vehicle retail sales for the first half of the year are projected to increase by 7.5% compared to the same period in 2024 [1].
Total new-vehicle sales in May 2025 are projected to reach 1,489,800 units, a decrease of 100,000 units from May 2024 when not adjusting for the number of selling days [3]. The seasonally adjusted annualised rate (SAAR) for total new-vehicle sales is expected to be around 15.6 to 15.7 million units for May and June 2025, slightly down from the peak in the early spring months [3].
Retail demand for new vehicles remains robust, with retail sales expected to increase by 1.1% over a year ago [1]. Trucks and SUVs are on pace to account for 81.9% of new-vehicle retail sales, up 1.8pp from May 2024 [1].
Sales including hybrid electric vehicles (HEVs) and plug-in hybrid vehicles (PHEVs) have surged to 25% of total industry sales, with HEVs accounting for 14.8% and PHEVs for 2.1% of sales [1]. Meanwhile, electric vehicles (EVs) are expected to account for 8.1% of sales, down 0.4pp from a year ago [1].
The average new-vehicle retail transaction price in May 2025 is expected to reach $45,462, up $649 or 1.4% from May 2024, but down $592 or 1.3% from April [1]. This growth in market share has been driven by carmakers such as Toyota and Honda [1].
However, the ongoing tariff effects have introduced significant cost challenges. Tariffs imposed on imported autos and auto parts have gradually increased vehicle prices, with potential additional costs of up to $5,700 on vehicles imported from outside North America and over $1,000 for vehicles assembled in the US, due to tariffs on imported parts [2][5]. These tariff-related cost pressures, combined with near-record loan rates, are expected to slow sales pace later in 2025 and contribute to revenue pressures despite strong early-year market performance [2][5].
Despite these challenges, the industry is adapting. For instance, the 2026 model-year Toyota RAV4, unveiled this week, will be offered exclusively as a HEV or a high-performance plug-in hybrid, signalling a deeper commitment to hybridisation [1].
In terms of vehicle turnover, the average time a new vehicle remains in the dealer's possession before sale is expected to be 49 days in May, up from 45 days in stock from one year ago [1]. Retail inventory levels are currently at 2.13 million units, a 23% increase from May 2024 [1]. The industry's inventory days of supply is 57 days in May, up seven days from a year ago [1].
Consumers are on track to spend nearly $53.8 billion on new vehicles this month, an increase of 7% compared to 12 months ago [1]. The average monthly finance payments in May are on pace to be $748, up $21 from May 2024, marking a record for the month [1].
Interestingly, 34.5% of vehicles sold in less than 10 days in May, up 1.2pp from a year ago [1]. However, trade-ins are expected to carry negative equity this month, with 24.4% of trade-ins having negative equity, an increase of 0.5pp from May 2024 [1].
The average used-vehicle price is projected to reach $29,168, an increase of $130 from a year ago [1]. A total of 57.5% of sales had positive vehicle gross, up 0.2pp from a year ago [1]. The average incentive spending per unit in May is expected to fall to $2,536, down $143 from May 2024 [1].
Plug-in hybrid vehicles (PHEV) are on pace to make up 2.1% of sales, up 0.1pp from May 2024 [1]. The average manufacturer incentive per vehicle in May 2025 is projected to reach $2,563 (€2,261) [1].
In conclusion, while sales volumes remain solid in May 2025 with mild deceleration, the ongoing tariff effects have introduced significant cost challenges that are forecast to temper new-vehicle sales growth in the latter half of 2025 [1][2][3][5].
[1] Cox Automotive [2] J.D. Power [3] Edmunds [4] Kelley Blue Book [5] National Automobile Dealers Association (NADA) Data
In the context of growing retail demand for new vehicles, the finance sector is witnessing an increase in consumer spending, with an anticipated $53.8 billion being spent in May 2025, a 7% increase from the previous year [1]. Furthermore, the business environment for automakers is also impacted by the rise in technology, as hybrid and electric vehicles are increasing their market share, with electric vehicles expected to account for 8.1% of sales in May 2025 [1].
