A surge in U.S. car sales seen at the end of 2024 is reportedly not expected to last into 2025.
Driven by a strong fourth quarter, the annualized rate for total car sales in 2024 reached 15.9 million, up from the previous year’s 15.5 million, Bloomberg reported Friday (Jan. 3).
Electric vehicle (EV) sales grew 12% in the fourth quarter, up from 8% in the third quarter, and reached a record 1.3 million, according to the report. Plug-in models now account for 8% of total U.S. vehicle sales, up slightly from the previous year.
The year-end surge in EV sales was likely driven by consumers racing to buy the vehicles before President-elect Donald Trump cuts the current $7,500 tax credit for EVs, as he is expected to do, the report said. As a result, the surge is not expected to continue in 2025.
The overall new car market also saw an improvement in the fourth quarter, which is expected to boost the full-year sales figure higher than previously forecast, per the report.
Lower interest rates, higher manufacturer incentives and an end to consumers’ anxiety around the election contributed to rising car sales, according to the report.
Looking ahead, however, the price of new cars could rise due to tariffs that Trump has threatened to impose on Canada and Mexico, the report said. Both countries play important roles in the U.S. automotive industry’s supply chain.
The cost of new cars has already kept sales below pre-pandemic levels, and the fourth-quarter surges in EV sales and total car sales are not expected to last, per the report.
Cox Automotive Chief Economist Jonathan Smoke said in December that “threats and worries” added a “sense of urgency to buying,” according to the report.
It was reported Dec. 29 that carmakers and dealers were pricing their wares more aggressively because vehicle supply was climbing as COVID-initiated supply shortages came to an end.
During December, the discounts and other incentives offered to car buyers rose totaled about $3,400 — a figure that was more than 25% higher than it was a year earlier, the Wall Street Journal reported Dec. 29.
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