U.S. new-vehicle sales are forecast to be up 4% for a roller-coaster year buffeted by federal policy changes and inflationary pressures.

A joint J.D. Power-GlobalData report estimates about 13.6 million units will have sold at retail by the time 2025 comes to a close. 

The increase comes despite a fourth-quarter decline from sales bumps in the spring and third quarter that were spurred by Trump administration policy changes. 

The forecast sees year-over-year December sales down 7% to 1.2 million units and fourth-quarter sales down 5% to 3.4 million. It estimates deliveries in the second half of the year as flat from a year earlier at 6.9 million units.

A spring sales surge as consumers accelerated auto purchases to avoid any trade tariff-induced price increases brought a 173,000-unit bump, according to the forecast. In the third quarter, sales spiked again, this time by more than 304,000 units as many people picked up electric vehicles to lock in expiring federal tax credits.

So far, the tariffs have had limited effect on new-vehicle prices, according to the report. The question is whether we’ve yet seen the full impact of the sweeping duties on auto and auto parts imports. 

The forecast foresees a potentially positive outcome of the tariffs and the end of the EV tax credit in “the recalibration of OEM production schedules to accommodate new tariff realities and EV requirements.” Those shifts will help increase demand and reduce pressure on OEM and retailer profit margins, said Thomas King, J.D. Power’s OEM solutions president. Less focus on sales of pure EVs removes the pressure of the deep discounts needed to juice their sales, he pointed out.

Still, the reality remains that new-vehicle prices are still near record highs. The average transaction price in December is projected to be $47,104, up 1.5% year-over-year. The average used price is $29,571, still high in part due to reduced vehicle production during the pandemic, along with low lease maturities and subdued manufacturer discounts. Meanwhile, 27% of trade-ins are expected to be under water this month, up four percentage points year-over-year.

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