December new-vehicle sales, to be confirmed in early January, are expected to show steady growth over last year’s market. According to the Cox Automotive forecast released this week, December’s seasonally adjusted annual rate (SAAR), or sales pace, is expected to finish at 16.5 million. This SAAR is up from last year’s 15.9 million level and equal to November’s 16.5 million. Sales volume in December is expected to reach 1.47 million, a 7.7% increase from last month but flat compared to one year ago.

As the auto market heads into 2025, the Cox Automotive Economic and Industry Insights team anticipates the new-vehicle market to grow by approximately 3%. Overall, the team expects 2025 to be another positive year for car buying.

According to Charlie Chesbrough, senior economist at Cox Automotive: “With the U.S. election season now in the rearview mirror, we are seeing a bit of a bump up in sales. Both October and November saw a shift to a higher sales pace, and a similar outcome is forecast this month. Many buyers who thought it best to wait to get the best deal are realizing that now is the time to buy before new administration policy changes are implemented. Some vehicle buyers are taking advantage of EV discounts that could be dialed back by the new administration, and others may be concerned potential tariffs may hit prices. So, the market has strong tailwinds as the year comes to a close.”   

Year-over-year sales gains were delivered in 2024 by every major manufacturer except Stellantis and Tesla, while BMW’s sales were flat. The 2024 sales crown will go to General Motors, with sales forecast to finish near 2.7 million units, up over 4.2% from last year.

 CarGurus released its 2024 Recap & 2025 Outlook, spotlighting this year’s biggest market influences, as well as expectations for the next year.

“If 2024 had one defining theme, it would be affordability. As consumers became more price conscious in response to high interest rates and stubbornly high prices, demand for used vehicles—especially Certified Pre-Owned Vehicles—grew significantly,” said Kevin Roberts, director of economic and market intelligence at CarGurus. “Affordability will continue to influence the market in the year ahead, especially as we consider the potential impacts on vehicle pricing in light of proposed tariffs and the possible end of the electric vehicle tax credit.”

The pivot to affordability played a role in the surge of new-vehicle inventory, which increased by nearly 31% since the end of 2023 as prices hovered at an average of $49,000 despite market days supply (MDS) rising for certain automakers. Compared to the national average of 82 MDS, some saw this metric exceed 100, including Stellantis (121 MDS), Ford (121 MDS), and Nissan (113 MDS). Conversely, the used market remained in tight supply as the average price declined by 3% to $27,900. Also, certified pre-owned (CPO) selection increased by nearly 10%, with demand surging by 17%.

Other key themes for 2024 include:

• The rise of hybrids: With the broader shift toward affordability, declining hybrid prices helped bring the segment center stage in 2024—taking on the demand that many expected for electric vehicles (EVs). The average price of a new hybrid dropped nearly 10% in 2024, reaching $46,600 (compared to the average new EV price of $62,000). As a result, several new hybrid models topped this year’s list of fastest-moving vehicles, including the Toyota Sienna, Toyota Highlander Hybrid, and Honda Civic Hybrid. 
• A late model year listing shortage: The legacy of the semiconductor shortage is making its mark on the used vehicle market, with 2020 and 2021 models noticeably harder to find compared to years prior. While overall used car inventory stabilized in 2024 (down only 1%), 2021 model-year inventory dropped by nearly 22%, and 2020 models saw a 17% decline. These gaps will shape the used market for the next several years.
• Shoppers’ love of larger body styles—especially pickups—remained strong in 2024: In examining the most viewed models of 2024, pickups dominated. The Chevrolet Silverado 1500, Ford F-150, and GMC Sierra 1500 topped the list of most viewed 2024 models. The 2025 models capturing the most attention included the RAM 1500, Toyota Camry, and Honda Pilot.

The report also highlights trends to watch in 2025, including:

• The potential impact of tariffs: As uncertainty around tariffs looms large, select automakers could see greater impacts than others. As of November, Hyundai, Mercedes-Benz, and Kia have the highest percentage of listed models made outside of North America. The key factor determining the scale of impact will be the timing of policy decisions and whether automakers will have sufficient lead time to adjust plans before tariffs are implemented.
• Influence of EV tax credits on demand: The possible end to the New Clean Vehicle Tax Credit ($7,500) and Used Clean Vehicle Credit ($4,000) could potentially limit EV sales demand in 2025—especially as shoppers focus on affordability. This is especially pronounced in the used market, where one-third of listings fall under the $25,000 qualification limit (as of November). This price segment drives strong demand, accounting for over 37% of sales year-to-date. Shoppers looking to take advantage of the credit now will find the greatest availability of qualifying used models in the Tesla Model 3, Chevy Bolt, and Nissan Leaf. 
• A rise in demand for higher-priced models:  While shoppers are still expected to prioritize affordability in 2025, the potential for even lower interest rates could expand buying power for buyers seeking lower monthly payments. This, in turn, may reignite demand for more premium options. However, this will also depend on decisions around tariffs and their impacts on automotive pricing.

New-vehicle prices in November climbed higher year over year for the second straight month, according to data from Kelley Blue Book. Last month, the average transaction price (ATP) for a new vehicle was $48,724, an increase of $699, or 1.5%, from November 2023. The November ATP was also higher by $720 compared to the downwardly revised ATP in October of $48,004.  

New-vehicle inventory at the start of November was above 3 million units for the first time since 2020, providing new-vehicle shoppers with excellent buying opportunities. And buy they did. Despite higher prices, sales last month topped 1.36 million units, according to Kelley Blue Book, and delivered a seasonally adjusted annual rate (SAAR) of sales of 16.5 million, the best sales pace since the spring of 2021.

“Higher prices were met with higher discounts in November, which has kept the retail business moving,” said Cox Automotive Executive Analyst Erin Keating. “Following the national election, pent-up demand and some improvements in consumer confidence seem to be driving the market. And higher incentives are certainly helping as well.”

Sales incentives for new vehicles in November averaged 8.0% of ATP, up from 7.8% in October. Incentives have now increased for five straight months. One year ago, in November 2023, incentive spending was equal to 5.3% of ATP. Incentives last month were higher by more than 50% year over year (approximately $1,300), while vehicle prices increased by only 1.5% (approximately $700), helping improve affordability and likely boosting vehicle sales.

The Q4 2024 Cox Automotive Dealer Sentiment Index reveals renewed optimism among U.S. automobile dealers. The latest survey, conducted immediately following the national election in early November, indicates that while current market conditions are still viewed as weak, dealers are increasingly optimistic about the future.

“The recent resolution of political uncertainty following the presidential election has cleared the path for a more optimistic outlook on future auto market conditions,” said Jonathan Smoke, chief economist at Cox Automotive. “Coupled with the potential for supportive measures such as tax rebates and the possibility of lower interest rates, dealers are feeling more hopeful about the road ahead as we move into 2025.”

The market outlook index, which measures dealers’ expectations for the auto retail market in the coming quarter, jumped to 54 in Q4 from 42 in Q3. This significant increase suggests that more dealers believe the auto market will be stronger in the next three months. One year ago, the index stood at just 41, one of the lowest readings in its history.

“We saw a surge in the outlook, technically the largest surge we have had quarterly in the history of the data, and it gets us back to Q2 2022 levels,” noted Smoke. “It is the best fourth quarter since 2021, which was the most profitable quarter in dealer history.”

Despite the positive outlook, the current market index score of 42 indicates that a majority of dealers still view the current retail auto market as weak. This score is slightly better than one year ago but remains well below pre-pandemic norms and long-term averages.

Franchised dealers, who sell both new and used automobiles, are more optimistic than used-only independent dealers, with an index score of 50. This score signals an equal number of dealers see the current market as strong as see it as weak. A majority of independent dealers indicate that the current market is weak, with a score of 39. However, this represents an improvement compared to last quarter and last year.

Profits and Costs Increase but Continue to Challenge Dealers

In Q4, the important profit index increased slightly, moving from 34 to 35. Both franchised and independent dealers noted higher profitability compared to Q3, but the index score remains well below levels seen in 2021 and 2022. The cost index also improved, falling from 77 to 71, suggesting some pressure may be easing.

Views of the U.S. economy were mostly flat in Q4 at 41, equal to the score in Q3 and two points higher than in Q4 2023. U.S. automobile dealers still see the economy as weak, a sentiment that has been consistent for the past two years due to elevated inflation and high auto loan rates.