J.D. Power-GlobalData Automotive Forecast May 2025

New-Vehicle Retail Sales Rise 1.1% in May as Tariff-Driven Rush to Showrooms Tapers Off; Consumers Spend Record Amount for May

J.D. Power:

The Total Sales Forecast

Total new-vehicle sales for May 2025, including retail and non-retail transactions, are projected to reach 1,489,800, which is flat from May 2024 according to a joint forecast from J.D. Power and GlobalData. May 2025 has 27 selling days, one more than May 2024. Comparing the same sales volume without adjusting for the number of selling days translates to an increase of 3.4% from 2024.

The seasonally adjusted annualized rate (SAAR) for total new-vehicle sales is expected to be 15.6 million units, down 0.1 million units from May 2024.

The Retail Sales Forecast

New-vehicle retail sales for May 2025 are projected to reach 1,235,700, a 1.1% increase from May 2024. Comparing the same sales volume without adjusting for the number of selling days translates to an increase of 5.0% from 2024.

The Takeaways

Thomas King, president of the data and analytics division at J.D. Power:

“Following the surge in vehicle purchases in March and April, driven by the fear of tariff-related price increases, May sales reflect a more tempered market. While many May sales were made by shoppers who accelerated their purchases, the sales benefit is being muted by the payback from shoppers who purchased in March and April instead of May.

“In March and April, approximately 149,000 extra vehicles were sold simply due to buyers re-timing their purchases on the expectation of significant future price increases. These re-timed sales will present a headwind to the industry sales pace for the balance of this year. Despite this effect, retail demand for new vehicles remains robust, with retail sales expected to increase 1.1% over a year ago.

“The threat of higher vehicle prices has yet to materialize in a meaningful way. Most manufacturers have made explicit commitments to maintain stable vehicle prices for the near-term. The consumer rush to showrooms in March and April did drive prices slightly higher, but the return to a more typical sales pace in May has led to a stabilization of average prices. The average new-vehicle retail transaction price in May is expected to reach $45,462, up $649 or 1.4% from May 2024, but down $592 or 1.3% from April.”

In showrooms, shoppers are still finding competitive deals, although the value of discounts from manufacturers has fallen slightly. The average manufacturer incentive per vehicle is on track to reach $2,563, a decrease of $200 from April, and a decrease of $143 from a year ago. Expressed as a percentage of MSRP, incentive spending is currently at 5.1%, a decrease of 0.3 percentage points from a year ago.

A similar dynamic exists with retailer profitability, which is slightly elevated but showing signs of normalization. Total retailer profit per unit—which includes vehicle gross plus finance and insurance income—is expected to be $2,502, up $98 from May 2024, but down $29 from April. Total aggregate retailer profit from new-vehicle sales for this month is projected to be $3.0 billion, up 9.8% from May 2024.

“The strong sales pace, combined with high average transaction prices mean consumers will spend more money buying new vehicles this month than any other May on record—and the fourth highest of any month on record. Consumers are on track to spend nearly $53.8 billion on new vehicles this month—7.0% higher than a year ago.”

Higher prices translate to higher monthly loan payments. Average monthly finance payments in April are on track to reach $748, an increase of $21 from May 2024, and the highest on record for the month of May. The average interest rate for new-vehicle loans is 6.93%, a nominal 10 basis point decrease from a year ago.

“Fleet sales are projected to decline 7.0% from a year ago, as manufacturers continue to prioritize retail buyers over the historically less profitable fleet channel.

“The average used-vehicle price is trending towards $29,168, up $130 from a year ago. This reflects the combination of reduced supply of recent model-year used vehicles—due to lower new-vehicle production during the pandemic—fewer lease maturities and manufacturers moderating discounts. An increase in used-vehicle prices means that average trade-in equity is rising, up $415 year over year to $8,292. Despite higher used-vehicle prices, the number of new-vehicle buyers with negative equity on their trade-in is expected to reach 24.4%—an increase of 0.5 percentage points from May 2024.

“Looking forward, the industry sales pace faces challenges on a number of fronts. For certain, sales pulled forward into March, April and May will become a meaningful headwind for the balance of the year.

“Less certain are the challenges related to tariffs. The effect of tariffs on the general economy remains ambiguous but, directionally, pose a meaningful risk to vehicle demand.

“Tariffs on imported vehicles and parts will increase costs significantly for many—but not all—manufacturers. For the industry, the current tariffs on imported vehicles and vehicle parts will increase the manufacturers’ cost of the average vehicle by $4,275. However, the tariff effect varies dramatically across manufacturers and also across vehicles within a manufacturer's portfolio, depending on where those vehicles are produced and where their components are sourced from. Recently announced changes to the tariff structure mean that many domestically produced vehicles face a negligible increase in costs, while imported vehicles are incurring increases of up to 25%.

“While higher production costs will ultimately lead to higher prices on many vehicles, the fact that prices for consumers remain largely status-quo—for now—should not be surprising. The highly competitive nature of the auto industry, coupled with the fact that many vehicles currently in dealer inventory were produced before tariffs took effect, mean that manufacturers are taking a cautious approach to their pricing strategies. The appropriateness of this cautious approach is further reinforced by ongoing uncertainty regarding the structure of tariffs, particularly for imported vehicles. The resolution of trade negotiations with one country, resulting in significantly reduced import tariffs, has provided some optimism. To the extent that similar agreements are made with other countries, cost increases and the associated pressure to raise prices could be significantly diminished.

“The net of these dynamics is that automakers’ pricing responses are likely to evolve gradually in the coming months, with each automaker facing unique circumstances in cost and competitive positioning. In general, prices are expected to rise, but by an amount significantly below that which is implied by the tariffs—and not at all on some models. Some pricing actions are anticipated to occur in June and July, but it is likely that it will be year-end before go-forward pricing fully materializes.”

The Details

• Fleet sales are expected to total 254,069 units in May, down 7.0% from May 2024. Fleet volume is expected to account for 17.1% of total light-vehicle sales, down 1.2 percentage points from a year ago.
• Internal combustion engine (ICE) vehicles are projected to account for 74.9% of new-vehicle retail sales, a decrease of 4.1 percentage points from a year ago. Hybrid electric vehicle (HEV) sales are expected to reach 14.8%, an increase of 4.3 percentage points from a year ago. Plug-in hybrid vehicles (PHEV) are on pace to make up 2.1% of sales, up 0.1 percentage points from May 2024, while electric vehicles (EV) are expected to account for 8.1% of sales, down 0.4 percentage points.
• U.S. final assembly vehicles are expected to make up 53.6% of sales in May, up 1.4 percentage points from a year ago.
• Trucks/SUVs are on pace to account for 81.9% of new-vehicle retail sales, up 1.8 percentage points from May 2024.
• Retail inventory levels are currently at 2.13 million units, a 23.0% increase from May 2024.
• The industry’s inventory days of supply is 57 days in May, up 7 days from a year ago.
• 57.5% of sales had positive vehicle gross, up 0.2 percentage points from a year ago.
• The average new-vehicle retail transaction price in May is expected to reach $45,462, up $649 from May 2024. Transaction price as a percentage of MSRP increased to 91.4%, up 0.4 percentage points from a year ago.
• Retail buyers are on pace to spend $53.8 billion on new vehicles, up $3.5 billion from May 2024.
• Average incentive spending per unit in May is expected to fall to $2,536, down $143 from May 2024. Spending as a percentage of the average MSRP is expected to decrease to 5.1%, down 0.3 percentage points from May 2024.
• Average incentive spending per unit on trucks/SUVs in May is expected to be $2,670, down $87 from a year ago, while the average spending on cars is expected to be $1,948, down $417 from a year ago.
• Leasing is expected to account for 20.7% of sales this month, down 3.3 percentage points from a year ago.
• The average time a new vehicle remains in the dealer's possession before sale is expected to be 49 days in May, up from 45 days a year ago.
• 34.5% of vehicles sold in less than 10 days in May, up 1.2 percentage points from a year ago.
• Average monthly finance payments are on pace to be $748, up $21 from May 2024. The average interest rate for new-vehicle loans is expected to be 6.93%, down 0.10 percentage points from a year ago.
• So far in May, average used-vehicle retail prices are $29,168, up $130 from a year ago. Trade-in equity is trending towards $8,292, which is up $415 from a year ago.
• 24.4% of trade-ins are expected to carry negative equity this month—an increase of 0.5 percentage points from May 2024.

EV Outlook

Tyson Jominy, senior vice president of data and analytics at J.D. Power:

“The electric vehicle segment is facing a notable downturn this month. Its share of retail sales has declined 0.5 percentage points year over year, marking the weakest performance since February 2024 and effectively erasing nearly two years of growth.

“However, the broader electrification trend tells a more nuanced story. Electrified vehicle sales—including hybrids and plug-in hybrids—have surged to 25% of total industry retail sales, driven largely by strategic shifts from automakers like Toyota and Honda. These manufacturers are aggressively transitioning their lineups toward hybrid models, contributing to an increase of 4.1 percentage points in overall electrification share from a year ago. As an example, the 2026 model-year Toyota RAV4 unveiled this week will be offered exclusively as a hybrid or a high-performance plug-in hybrid. This signals a deeper commitment to hybridization, even as industry plug-in hybrid sales remain flat at just 2% of the market.”

Global Sales Outlook

David Oakley, manager, Americas vehicle sales forecasts at GlobalData:

“Global light-vehicle sales in April increased 6.0% year over year to 7.3 million units, with most regions showing year-over-year growth. The selling rate for April finished at 91.8 million units, up from a downwardly revised result of 90.4 million units in March.

“North America, China and Japan were the main contributors to year-over-year sales increases in April. The pull-forward effect that was observed in both the United States and Canada in March, as consumers sought to avoid price hikes due to tariffs, was repeated to some extent in April, with sales increasing 11.3% year over year in the United States and 7.8% in Canada. In China, continued government subsidies helped boost the market, particularly for new energy vehicles, with overall volumes growing 12.0%. Sales fell 2.2% in Western Europe amid economic concerns.

“May sales are expected to increase 4.6% from May 2024. U.S. sales are likely to see robust growth as there is still a window—albeit a closing one—for customers to make purchases before the effect of tariffs is reflected in higher pricing. China and Japan are both expected to see year-over-year growth, while the economic recovery in Argentina and favorable calendar effects in Brazil should enable an expansion in sales in South America. The global selling rate is projected to reach 90.1 million units, up from a rate of 87.6 million units in May 2024.

“Some of the worst fears regarding a global trade war have eased in recent weeks thanks to the announcement of lower tariffs between the United States and China for at least 90 days. Still, there are many potential pitfalls due to the unpredictable nature of U.S. trade policy and economic risks. Out 2025 global sales forecast stands at 89.8 million units, up 1.1% on 2024 volumes.”

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