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March 2025 is shaping up to be a significant month in the US car market, according to J.D. Power's latest forecast. The month will have 26 selling days, one less than a year ago.
One of the key factors affecting the market is the potential impact of tariffs on automobiles. J.D. Power's analysis suggests that these tariffs have caused a rush of consumers to buy new vehicles ahead of their implementation, pulling forward roughly 173,000 sales that would otherwise have occurred later. This "pull-ahead" effect has temporarily boosted sales in March and April but is expected to result in subdued sales in subsequent months, such as June, which is projected to see lower new vehicle sales due to the pre-buy phenomenon.
The tariffs have also led to production shifts and inventory disruptions. New light-vehicle inventories peaked earlier in the year but have since declined. Inventory levels are expected to drop to about 2.3 million units by the end of August before rebounding slightly later in the year. The uncertainty around trade policy and tariff impact has caused some consumers to delay vehicle purchases, expecting more clarity and potentially better pricing in the future.
Incentives to move inventory have increased but remain below pre-pandemic levels. Manufacturers are cautiously increasing incentives to protect profit margins, while dealers are discounting more heavily and experiencing lower profits. Average incentive spending is expected to total about $2,727 per unit in June 2025, and finance payments on new vehicles reached record highs for the month, reflecting higher prices and tighter affordability.
Retail inventory levels are expected to finish around 2.2 million units in March 2025, a 31.3% increase from March 2024. The total new-vehicle sales in March 2025, including retail and non-retail transactions, are projected to reach 1,525,200 units. Retail sales of new vehicles in March 2025 are expected to reach 1,268,200 units, up 13% from March 2024.
The average trade-in equity is expected to rise slightly, up $242 year on year to $7,641. New-vehicle-loan interest rates are expected to remain flat year on year at 6.82%. The average used-vehicle price in March 2025 is trending towards $28,552, a decrease of $22 compared to the same time last year.
The used market is being influenced by emerging tariff-related price concerns, although their effect is not yet material. The average incentive spend per vehicle is expected to grow by $235 in March 2025. The specific consequences of automotive industry tariffs are impossible to define due to absent clarity on their implementation.
Despite these challenges, the US automotive industry is generally performing as expected, with a continuation of well-established trends pointing to gradual increases in the sales pace at the expense of gradually larger discounts and reduced profitability. The average retail transaction price for new vehicles in March 2025 is trending toward $44,849, up $637 from March 2024. Total new-vehicle sales in the first quarter of 2025 are projected to reach 3,860,000 units. New-vehicle retail sales for the first quarter of 2025 are projected to reach 3,168,000 units.
In conclusion, the US car market is facing a complex environment due to the potential impact of tariffs. These tariffs are causing short-term sales distortions, inventory challenges, and pricing/incentive adjustments through at least the first half of 2025. The likelihood of significant near-term disruption is high for the entire automotive ecosystem from suppliers and manufacturers to retailers and consumers.
- The uncertain trade policy and automotive tariffs in March 2025 have directed the attention of technology-focused media towards East Coast automakers, who are experimenting with new self-development courses for their dealership employees to adapt to the rapidly changing market conditions.
- In the realm of education-and-self-development, several universities across the nation are collaborating with sports organizations to provide research grants on the impact of tariffs on consumer behavior, studying possible trends in general-news and sports sectors that might affect automotive sales in the coming months.
