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The automotive market in April 2025 saw a significant shift, with tariffs and the growing electric vehicle (EV) sector leaving a noticeable impact.
According to J.D. Power, tariffs added an estimated $4,275 per vehicle on average, putting pressure on automakers and potentially influencing consumer pricing. This cost increase led to accelerated sales in March and April as buyers anticipated price hikes, resulting in a sales pull-forward effect. However, sales eased after April, indicating some pent-up demand may have been front-loaded due to tariff concerns.
Despite tariffs causing sharply increased production and import costs, the average new car price rose only modestly (around 2.5%) in April 2025. This was due to dealers managing existing inventory imported before tariff hikes, with inventory levels varying by brand.
In the face of these challenges, the EV market continued to expand. EVs are expected to account for 8.7% of sales, up 0.2pp from a year ago. Retail sales of new vehicles are projected to reach 1,284,826, a 14.7% increase from the same month last year. EV inventory levels are currently at 2.15 million units, a 21.4% increase from April 2024.
The growing EV market is partially attributed to the $7,500 federal EV tax incentive, which remains in place, offering a distinct value proposition for EVs.
In addition to the EV market growth, trucks and SUVs are on pace to account for 82.1% of new-vehicle retail sales, up 2.5pp from April 2024. Plug-in hybrid vehicles are on pace to make up 2.3% of sales, gaining 0.4pp from last April.
The average new-vehicle retail transaction price in April is expected to reach $45,764, up $887 from April 2024, and up $975 from March. The average manufacturer incentive spend per vehicle is on track to reach $2,808 (€2,466) in April.
Looking ahead, multiple carmakers have committed to keeping the manufacturer's suggested retail price (MSRPs) stable through the early summer months. The average time a new vehicle remains in the dealer's possession before sale is expected to be 52 days in April, up from eight days a year ago.
The seasonally-adjusted annualized rate (SAAR) for total new-vehicle sales is expected to be 17.9 million units. Average monthly finance payments in April are on track to reach $742, the highest on record for the month of April.
Fleet volume is expected to account for 15.5% of total light-vehicle sales, down 3.1pp from a year ago. The expected total number of fleet sales in April is 235,071 units, a decrease of 7.8% from April 2024. Full-hybrid sales are expected to reach 12.6%, an increase of 2.9pp from a year ago. Internal-combustion engine vehicles are projected to account for 76.1% of new-vehicle retail sales, a decrease of 3.8pp from a year ago.
Leasing is expected to account for 20.6% of sales this month, down 3.2pp from a year ago. The average used-vehicle retail price is trending towards $28,725, up $200 from a year ago, while so far in April, average used-vehicle retail prices are $28,725, also up $200 from a year ago.
In summary, tariffs and the growing EV market shaped the automotive landscape in April 2025, causing an initial lift in sales followed by moderation as the market adapted. The EV market continues to expand, with the federal tax incentive playing a significant role. Despite the challenges posed by tariffs, the overall new-vehicle sales are projected to increase by 10.5% year on year in April 2025.
- The finance costs in the retail sector, particularly in the automotive industry, saw an average increase of $4,275 per vehicle due to tariffs, pressuring automakers and potentially impacting consumer pricing.
- Data-and-cloud-computing solutions were crucial for dealers to manage inventory effectively and strategically, maintaining their position in the competitive landscape despite increased production and import costs.
- With electric vehicles (EVs) accounting for 8.7% of sales and expected to rise more in the following months, technology and innovation in the automotive sector, like electric vehicles, are reshaping the lifestyle choices of consumers and setting new standards.
- In the transportation industry, tariffs caused a temporary spike in sales as buyers anticipated price hikes, leading to a sales pull-forward effect. However, industry experts predict that this trend will level off after April as some pent-up demand has been front-loaded.
- Business strategies in the automotive market are focusing on stabilizing manufacturer's suggested retail prices (MSRPs) during the early summer months, aiming to balance the impacts of tariffs and the growing EV sector while catering to evolving consumer preferences for new and used cars.
