U.S. auto sales are projected to experience their highest growth since 2019, according to recent industry forecasts.
Analysts from S&P Global, Edmunds, and Cox Automotive predict that new vehicle sales will increase by up to 2.5% in 2025, reaching a total of approximately 16.2 to 16.3 million vehicles sold, CNBC reported.
This marks a significant recovery from the estimated 15.9 to 16 million vehicles expected to be sold in 2024. The anticipated growth is attributed to the normalization of vehicle inventories and incentives and discounts from automakers.
Additionally, easing financing conditions are helping to make new vehicles more accessible to consumers.
Jessica Caldwell, Edmunds’ head of insights, told CNBC that while many car buyers still feel the financial strain, the market has become more favorable in recent months. Consumers are finding better conditions compared to the beginning of 2024. The expected growth points to a more positive outlook for the automotive industry heading into 2025.
The surge in vehicle sales is expected to be driven by the increased availability of entry-level and more affordable vehicles. The industry continues to recover from the challenges posed by the COVID-19 pandemic, which caused disruptions in production and led to inventory shortages.
Due to these factors, prices for new cars have been high, but now automakers are offering more affordable options to attract budget-conscious buyers.
Edmunds reports that the average transaction price for new vehicles in 2024 is $47,465, slightly down from the previous year but substantially increasing from $37,310 in 2019.
Consumers increasingly turn to lower-priced models as they seek better deals, making the entry-level market one of the largest growth areas. This shift toward more affordable vehicles is expected to continue in 2025 as automakers respond to demand for budget-friendly options. As a result, automakers are focusing on offering more value for money.
Consumers are beginning to feel less pressure when shopping for cars, contributing to the overall improvement in market conditions.