New vehicle sales forecasted to surge in 2025 after successful Q4

New vehicle sales are expected to rise in Dec., benefitting from a strong post-election boost.

Driving the news: New car demand has remained higher than the rest of the year since the start of the fourth quarter, with both Oct. and Nov. seeing better-than-expected sales.

• This month, sales are forecast to hit 1.47 million units, in line with last year’s volume but 7.7% higher than Nov.

• Due to the increase in sales this Dec., Cox Automotive expects a full-year total of 15.85 units, up 2.3% from 2023 and slightly higher than its original forecast of 15.7 million.

Zooming in: Several factors are driving consumers to the dealerships in greater numbers before the year’s end.

• Lower interest rates and higher incentives have helped make vehicles more affordable, boosting demand among buyers desperate for solid deals.

• Many consumers are also anxious to purchase their car before the change in administration. Those interested in electric cars are especially motivated, as the President-elect has vowed to end Biden-era tax credits for green vehicles.

Looking ahead: While some of the difficulties that have marked this year are expected to persist into the next, consumer demand is likely to remain elevated as well.

• While growth this year has been relatively slow, Kelley Blue Book is forecasting a 3% increase in year-over-year new car sales for 2025, bringing the industry to 16.3 million units.

• This would be the highest level seen by the industry since 2019, helping to stave off profitability pressures that have impacted dealers throughout 2024.

• On the used vehicle side, sales are expected to reach 20.1 million units, the most since 2021.

Bottom line: Although the change in administration is introducing a new era of uncertainty, most signs are pointing to 2024 ending on a strong note. What’s more, those positive trends are likely to carry into next year, setting the car industry up for stronger momentum in the coming months.

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