Economic uncertainty, tariff costs, and the end of the $7,500 federal electric vehicle (EV) tax credit all play a role in the slowdown
The end of the year is typically a good time to be a car dealer. But 2025 has proven complicated for everyone. Car sales may be down significantly as the winter holidays approach.
Automakers have just begun reporting November sales figures. Early reports are discouraging for dealers.
Kelley Blue Book parent company Cox Automotive estimates that November’s new car sales will “fall to 1.27 million, down 1% from October and 7.8% from last year’s finish.”
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Cox Automotive Senior Economist Charlie Chesbrough explains, “The headwinds from higher prices and fewer government subsidies for electric vehicles are finally slowing the market after a surprisingly strong previous six months.”
The year started strong, he notes. However, government policies had a greater impact on prices than in a typical year.
“Sales began surging in the spring as buyers rushed to market to beat expected higher prices in the wake of announced tariffs,” Chesbrough says.
Car dealers typically aim to keep a little more than two months’ worth of cars on the lot, and often overshoot that target. That means higher import prices don’t really hit shoppers until months after automakers begin to pay them.
“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,” Chesbrough explains.
Early reports bear out the pessimistic predictions. Industry publication Automotive News notes that Ford “snapped a streak of eight straight monthly sales gains” with a 0.7% sales drop in November. Hyundai sales also fell 2.3%.
