2025 Auto Market Forecasted to Grow, EV and Hybrid Sales to Soar

A stabilizing economy is expected to be a key driver of new-vehicle sales hitting a new post-pandemic high in 2025.

new-car-sales-forecast-2025
Consumers and auto dealers alike are expected to feel increased confidence in the economy in 2025, fueling higher sales.

The U.S. automotive market is set to continue its post-pandemic recovery in 2025, as Cox Automotive is projecting a promising outlook fueled by economic momentum and growing consumer confidence.

New-vehicle sales are expected to reach 16.3 million units in 2025, marking the highest volume since 2019 and a modest rise from 2024’s 16.0 million units.

“The market is gaining momentum, economic fundamentals are improving, and consumer sentiment is pointing in the right direction,” said Jonathan Smoke, Cox Automotive’s chief economist.

Economic Momentum Driving Optimism

A stabilizing economy is a key driver of this growth, with 2025 forecasted to see a 2.6% GDP increase, consistent with pre-pandemic levels. Lower interest rates, steady job market conditions and increased consumer and dealer confidence are also contributing factors.

As Smoke described it, “The Goldilocks economy is delivering positive momentum... not too cold, not too hot, but just right growth.”

Electrified Vehicles Take Center Stage

Electrified vehicles are expected to account for 25% of total U.S. auto sales in 2025, with pure electric vehicles (EVs) reaching a record 10% market share, up from 7.5% in 2024. This growth is bolstered by the introduction of 15 new EV models, expanded charging infrastructure and state-level incentives offsetting potential federal policy shifts.

Hybrids and plug-ins will make up the remaining 15% of the market, further eroding the dominance of internal combustion engine vehicles, which will drop to 75% of sales -- the lowest on record.

Affordability and Availability

Improving affordability is another positive trend. Auto loan rates are declining, and credit approval rates are rising as lenders report stronger portfolio performance. Additionally, rising inventory levels are enabling competitive incentives, making vehicles more accessible to buyers.

Cox Automotive also expects retail used-vehicle sales to grow to 20.1 million units, the best performance since 2021. Dealer profitability is stabilizing, with sufficient demand supported by improved economic conditions.

Enhanced Buyer Experience

Consumer satisfaction with the car-buying process has reached an all-time high, with 75% of buyers reporting they are “highly satisfied,” according to Cox Automotive’s forthcoming 2024 Car Buyer Journey Study. Innovations in omnichannel retailing and improved technology are cited as major factors driving this satisfaction.

Looking Ahead

While challenges like affordability and policy uncertainties remain, Cox Automotive’s projections signal optimism for 2025. With a growing EV market, a stabilizing economy and increasing buyer satisfaction, the year ahead could set new benchmarks for the automotive industry.

Shop & Product Showcase

  • Read testimonials from real collision repair shops about the tools and technologies they use to get the job done.