New-vehicle retail sales ended 2025 on a softer note, but dealers still closed out the year with higher full‑year retail volume, slightly better pricing discipline, and healthier per‑unit margins as EV fire‑sale incentives began to unwind, according to a new report from J.D. Power and GlobalData.
Snapshot: In the report, Thomas King, president of OEM solutions at J.D. Power calls 2025 “a sales roller coaster” driven by import tariffs and EV tax-credit changes that pulled demand forward and then left slower months in their wake.
What they’re saying: “Fears of future tariff-related price hikes caused sales to jump by 173,000 vehicles between March and April, followed by a sales slowdown in subsequent months,” writes King.
“Another sales jump occurred between August and September as 304,200 electric vehicle shoppers made purchases before the September 30 expiration of federal EV tax credits, followed by another sales slowdown whose effects are still being felt in December.”
By the numbers: December new-vehicle retail sales are projected at 1.22 million units, down 7.4% year-over-year (3.7% unadjusted for selling days), even as full-year retail volume is expected to finish up 4% to 13.6 million units, J.D. Power reports.
Total December sales, including fleet, are forecast at 1.45 million, off 7.5% from a year ago, with total-year volume still rising 2.3% to 16.3 million units.
EVs are on track to account for just 6.6% of December retail sales, down from 11.2% a year ago, as the pull-ahead from the September 30 federal EV credit expiration continues to drag on the back half of the year.
Zooming in: Despite widespread speculation about major tariff-driven price increases, the actual bumps have been relatively muted thus far.
The average transaction price in December is expected to hit $47,104, up $715 or 1.5% from last year.
But monthly finance payments still hit a record December level of $776.
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The reason: Car buyers are stretching their loan terms in order to afford new cars. 84-month loans are expected to account for 10.1% of financed sales this month, the second-highest December level on record behind 2021, notes King.
On top of that, average trade-in equity is down $327 year-over-year to $7,903.
And the number of buyers with negative equity on their trade-in is expected to reach 26.9%, an increase of 4% from December 2024.
The intrigue: The steep discounts once required to drive high EV volumes are beginning to ease, which is helping slow the modest decline in total retailer profit per unit.
"This shift marks an important turning point for the industry, though the full impact will be realized in 2026, the first year where these dynamics play out across all twelve months," King said.
Looking ahead: King expects lower interest rates, more lease returns, and OEM production adjustments to tariff and EV realities to help boost demand and reduce pressure on margins in 2026.
But affordability remains near an all-time low, and executives from Detroit’s auto giants are set to testify about this exact issue at an upcoming Senate hearing.
"In sum, these dynamics set the stage for a more balanced and potentially stronger performance as 2026 progresses," King said.
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