Cox Automotive analysts are optimistic about the U.S. auto market as 2025 as retail sales were particularly strong at year-end.
Kelley Blue Book reported new-vehicle sales in 2024 finished near 16.0 million, an increase of just over two percent from 2023 and the best year for volume since the pandemic as nearly every automaker posted higher sales year over year in 2024. General Motors was the top-selling automaker in 2024, while Honda and Mazda delivered strong growth.
“Cox Automotive is optimistic about 2025, with plenty of reasons to believe it will be the best year since 2019,” said Cox Automotive Chief Economist Jonathan Smoke in a press statement. “The market is gaining momentum, economic fundamentals are improving, and consumer sentiment is pointing in the right direction. We are ready for what 2025 might bring.”
Growth Continues for Third Straight Year
Cox Automotive has previously forecasts that 2025 will be the best year for the market since 2019, with new-vehicle sales reaching 16.3 million units. While growth will remain slow, he trends are positive for a the third straight year of growth.
The retail used-vehicle market is expected to grow as well, with used retail sales forecast to reaching 20.1 million units that would make it the strongest performance for used vehicles since 2021, the best year on record. Used-vehicle inventory at retail is forecast to remain relatively tight; the Manheim Used Vehicle Value Index is forecast to increase at a historically normal pace, finishing 2025 slightly higher year over year.
Dealer profitability is stabilizing, and economic fundamentals are driving sufficient demand, according to Cox officials.
Economy Moving in the Right Direction
Cox analyst offered that economic momentum is building as the Presidential and Congressional election outcome reduced uncertainty about tax policy, contributing to stock market growth in the final months of 2024 and an uptick in both consumer and dealer sentiment.
The economic outlook for 2025 is positive, with a lower risk of recession and expected growth of 2.6 percent, consistent with pre-pandemic levels. Consumers are feeling better about the road ahead, as the U.S. election was smoothly settled, interest rates are below their peaks, and the job market has stabilized.
Additionally, vehicle affordability is expected to ease due to a combination of credit availability expanding as loan portfolio performance improve and yield spreads narrow. Auto loan rates have declined in recent months and approval rates are increasing, enabling growing demand. New-vehicle inventory volumes are expected to continue to rise, keeping incentives growing and supporting higher sales volumes.
EV Sector Continues to Expand
The 2025 electric vehicle sales expected to continue to continue the record breaking streaks is has had the previous two years. Cox Automotive predicts that one out of every four vehicles sold in 2025 will be electrified, with electric vehicles accounting for approximately 10 percent of the market total in the year ahead, up from roughly 7.5 percent in 2024. Hybrids and plug-ins will account for approximately 15 percent of the market and sales of pure internal combustion engine vehicles will drop to 75 percent of total volume, the lowest level on record.
While there is uncertainty about federal government incentives moving forward lead to a surge of sales at the end of the year, EV growth will be supported by approximately 15 additional EV models entering the market and the expansion of the EV charging network, according to Cox officials.
Buyer Satisfaction Forecast to Improve
Vehicle availability, competitive incentives and good news on auto loan rates has Cox Automotive predicting s healthy demand driven by capable buyers.
Notably, satisfaction with the new-vehicle buying process is at an all-time high, with three out of four buyers being “highly satisfied,” according to the 2024 Car Buyer Journey Study. The omnichannel car-buying approach, enabled by forward-thinking dealers and better technology, is making vehicle buying more efficient and driving higher satisfaction.
This all led to Smoke to state in the Cox Automotive Industry Insights and Forecast 2025 call that “ dealers, in particular, are going to enjoy the ride thanks to the Goldilocks economy that is delivering positive momentum at the end of 2024 and setting us up for not too cold, not too hot, but just right growth.”