New Vehicle Sales to Fall by Nearly 8 Percent Yearly: Cox

As more tariffed products replace existing non-tariffed inventory, vehicle prices move up, resulting in slower sales, said an economist.

Vehicles for sale are on display at a Toyota dealership in Houston on Jan. 4, 2022. Brandon Bell/Getty Images

Sales of new cars in November are estimated to decline amid higher prices and slowing electric vehicle (EV) volume, auto services company Cox Automotive said in a Nov. 25 statement.

“Sales volume is expected to fall to 1.27 million, down 1% from October and 7.8% from last year’s finish,” the company said. “November has 25 selling days, two fewer than last month and down one from last year, which accounts for some of the expected volume decline.”

The One Big Beautiful Bill Act, signed into law by President Donald Trump in July, ended an incentive program for EV buyers that had offered a tax credit of $7,500. Sept. 30 was the last day of the incentive.

Subsequently, EV sales have suffered. According to Cox, sales of EVs and plug-in hybrids are now “collapsing.” The company expects lower EV sales to “persist” while the market adjusts to new conditions.

Meanwhile, the seasonally adjusted annual rate (SAAR) of new vehicle sales, which measures the annual sales pace, is expected to be 15.7 million in November, up from 15.3 million in October, but down from 16.5 million a year ago. Charlie Chesbrough, senior economist at Cox, said a slowdown in the new vehicle sales pace was expected for the fourth quarter, which is exactly what’s happening.

“The headwinds from higher prices and fewer government subsidies for electric vehicles are finally slowing the market after a surprisingly strong previous six months,” Chesbrough said.

“Sales began surging in the spring as buyers rushed to market to beat expected higher prices in the wake of announced tariffs. Now, with more tariffed products replacing existing non-tariffed inventory, prices are drifting higher, leading to slower sales which may last through the remainder of the year and into next year.”

The Trump administration had instituted 25 percent tariffs on auto imports in April, which was followed by 25 percent tariffs on foreign auto parts. The rates have since been adjusted for certain trade partners based on negotiations.

As vehicle prices trend upward, some automakers have announced investments in the country.

During the opening of Toyota’s battery manufacturing facility in Liberty, North Carolina, earlier this month, the company announced its plan to invest an extra $10 billion in U.S. manufacturing facilities over a five-year period.

Last month, Stellantis announced plans to invest $13 billion over the coming four years to expand its U.S. manufacturing footprint. The investment is expected to add over 5,000 new jobs in plants across Indiana, Michigan, Illinois, and Ohio.

Earlier in June, General Motors said it’d invest $4 billion to expand the production of its internal combustion engine vehicles. The announcement “demonstrates our ongoing commitment to build vehicles in the U.S. and to support American jobs,” CEO Mary Barra said at the time.

In a Nov. 12 statement, vehicle valuation company Kelley Blue Book (KBB) reported that the average transaction price of a new vehicle had “declined marginally” last month.

According to KBB, this decline was “mostly expected” as sales of EVs have fallen sharply following the end of incentives in September.

The October dip “reflects a natural market adjustment after September’s record highs. Even with the pullback, prices remain elevated year over year,” Erin Keating, executive analyst at Cox, said.

“Fortunately for automakers, there is continued strength in consumer demand, especially from well-heeled households. Consumers remain engaged, and while affordability challenges persist, the industry is adapting with incentives and product mix shifts.”

Meanwhile, new vehicle inventory jumped 5 percent month-over-month in October to 3.04 million units, according to a Nov. 26 statement from S&P Global.

This was the third straight month where new vehicle inventory increased on a monthly basis, S&P said, adding that in the EV sector, inventory has surged 14 percent post the expiry of incentives.

“As the year progresses, manufacturers and dealers must adapt to these trends and manage new vehicle inventory levels to effectively meet consumer demand,” it said.