Strong automotive sales in first quarter mask growing affordability concerns as tariffs threaten entry-priced inventory, according to Cars Commerce’s Industry Insights Q1 Report.

The auto industry had a strong start to 2025, with first-quarter new-vehicle sales up 4.8% year over year. Despite the healthy pace, the market is grappling with growing affordability concerns. Cars priced under $30,000 now account for just 14% of new-vehicle inventory, down from 38% during the 2019-21 period, marking an erosion in access to budget-friendly models.

“For many Americans, a car isn’t a luxury — it’s an essential part of daily life. The entry-priced vehicle category still hasn’t recovered from the chip shortages caused by the pandemic, and these new tariffs could stall further progress. If these vehicles become out of reach for everyday buyers, it could have meaningful implications across the industry and the broader economy,” said David Greene, an industry analyst at Cars Commerce. “The vast majority — nearly 90% — of sub-$30K vehicles are assembled outside the United States, exposing them to potential price hikes or production cuts as trade policies shift. Only three models in this price bracket — the Honda Civic, Toyota Corolla and Chevrolet Malibu — are built domestically, and the Malibu is set to be discontinued in 2026.”

Despite these headwinds, the first quarter of 2025 saw strong new-vehicle demand. March sales were particularly robust, the sixth-highest March in nearly 50 years — largely driven by pre-tariff buying activity, seasonal tax refunds and automaker incentive spending.

Inventory levels have rebounded from the chip shortage, with new-car supply up 9% year over year and vehicles spending an average of 78 days on dealer lots — a figure that closely aligns with pre-pandemic norms. Prices, however, remain elevated. While the average new-car price has held steady at approximately $49,000 for the past 18 months, it is still 30% higher than in the first quarter of 2019. With tariffs now entering the equation, this pricing plateau is expected to break, likely driving prices higher in the coming months.