US Auto Sales Slowing After Strong Spring Boost Amid Economic Concerns

US Auto Sales Show Signs of Slowing After Strong Early Demand The US automotive market is currently experiencing a notable deceleration in sales after a vigorous boost in the spring, driven by a rush among consumers to secure vehicles prior to anticipated price increases from tariffs imposed by the Trump administration. This shift in consumer behavior has raised concerns about the sustainability of the recent sales momentum. In the second quarter, General Motors Co. reported a 7.3% increase in deliveries, despite a general decline in industry demand following the unexpectedly high sales figures noted in April and May. Ford Motor Co. also showcased a 14% rise in its second-quarter sales, largely attributed to an aggressive employee-pricing-for-everyone discount initiative. However, the growth rate began to stabilize by June, triggering questions about the overall market outlook. Similarly, Toyota Motor Corp. experienced a 7.2% increase in sales during the April to June period, although volumes remained nearly unchanged in June. David Christ, head of Toyota brand sales in the US, remarked, “We did have a lot of pull-forward business, I think the whole industry did” during the initial months of spring. He further indicated that “the sales pace returned to what I call more normal” levels afterward. According to J.D. Power, second-quarter sales have risen approximately 2.5% year-over-year, largely propelled by consumer activity spurred by the fear of rising prices due to tariffs. However, signs of retreat are emerging among various automakers. Subaru Corp. witnessed a 16% drop in deliveries in June, while Kia Corp. saw its volume fall by 3.2%, leading to a modest total second-quarter increase of 5%. Nissan Motor Co. faced a 6.5% decline in sales, contrasting with an 8.4% increase for Honda Motor Co., which only realized a 1.5% growth in June. The automotive selling rate is forecasted to have dropped to about 15 million units in June, marking the slowest pace in the past year, down from 17.6 million in April. This slowdown is attributed to consumer hesitancy regarding significant expenditures as economic uncertainty looms. Analysts predict that this trend could exacerbate further, given the ongoing high prices for vehicles. “The party is over,” stated Jonathan Smoke, chief economist at Cox Automotive, indicating a potentially tougher market ahead. In a forecast, Smoke suggests that the annualized monthly rate of auto sales in the US may remain around 15 million units in the latter half of the year, in contrast to the 16.3 million figure recorded for the first half of 2025. Last year, sales rested at approximately 16 million cars and light trucks. Randy Parker, CEO of Hyundai Motor Co.’s North America division, expressed cautious optimism, noting that the company anticipates new product launches in the second half to boost sales momentum amid a broader sales slowdown. Hyundai's second-quarter sales rose by 10%, yet the pace decreased to 3% in June. Dealers have reported a marked decrease in demand, with one dealership manager in Queens, New York, likening the prior rush to a panic buying scenario before a severe storm. As consumer concerns regarding the economy escalate—now cited as the foremost obstacle to sales—previous worries about high interest rates have taken a back seat, according to polling conducted by Cox. Amid rising vehicle prices, which have begun to climb again after a recent decline, the average cost reached $48,799 in June, reflecting a 1% increase from the previous year and a staggering 28% rise since 2019. This increase has forced many buyers to adapt their budgets significantly, with nearly 20% taking on monthly payments exceeding $1,000—an all-time high, according to Edmunds.com. Tariffs threaten to further inflate vehicle costs, as automakers have generally refrained from implementing sweeping price hikes. Instead, they are employing alternative measures like cutting incentives or selectively raising prices on models directly impacted by tariffs. Charlie Chesbrough, a senior economist at Cox, stated, “Given the impact of tariffs, prices are likely to start rising at a much faster rate,” highlighting the potential strains on consumer affordability. June’s sales declines have been described as a “hangover” effect from earlier spikes, with Mark Wakefield from AlixPartners projecting that automakers will ultimately pass around 80% of tariff-related costs onto consumers, potentially increasing prices by nearly $2,000 per vehicle. “We don’t see the full pass-through until the end of the year,” he commented, emphasizing the ongoing market challenges.