After years of absorbing rising sticker prices, American car buyers are showing clear signs of resistance, reshaping the auto market and slowing the sales momentum industry analysts expected for 2025. With the average new vehicle now nearing $50,000, many consumers are downsizing, turning to used models, extending loan terms and waiting for better deals before making a purchase.
Dealerships across the country report softer traffic and a growing preference for lower-cost vehicles, a shift driven by persistent inflation, higher interest rates and a cooling labor market. Analysts had projected a strong year for auto sales following post-pandemic supply recovery and federal tax cuts, but forecasts have flipped, now suggesting little or no growth for the year and limited improvement in 2026.
A mix of economic pressures is shaping the change. Auto tariffs and the collapse of the electric-vehicle market, accelerated by the end of the federal EV tax credit in September, have dragged down sales. Automakers benefited from a surge of last-minute EV purchases before the credit expired, but October delivered the slowest selling rate in more than a year, and November is expected to continue the downward trend.
Signs of strain are increasingly visible: vehicles are lingering longer on dealership lots, discounting is becoming more aggressive, and lower-income borrowers are defaulting on auto loans at higher rates. Despite these challenges, analysts say prices are unlikely to fall sharply because years of tight inventories have also pushed used-car prices to historically high levels. At the same time, rising repair and parts costs make keeping older vehicles on the road less economical, limiting how long buyers can delay a purchase.
The industry is also experiencing a widening divide between consumers. Wealthier buyers continue to sustain demand for high-end trucks and SUVs packed with premium features, but analysts warn that the market is increasingly relying on a small share of households to support sales.
Source: wsj