New-vehicle sales in the US rose in Q1 as consumers rushed to lock in purchases ahead of the implementation of tariffs that are expected to significantly boost vehicle prices.
Industry analysts warn that the upbeat start to the year could quickly unravel as Trump’s 25% tariffs on all imported vehicles go into effect.
“The disruptions and heightened uncertainty caused by such tariffs could result in the first quarter actually turning out to be the high point for the year,” Jonathan Smoke, Cox Automotive’s chief economist, said ahead of industry sales reports.
The numbers: GM reported 17% YoY sales growth and retained its title as the No. 1 automaker in the US. The company said it expected to be the No. 2 US EV maker, with EV sales up 94% to nearly 32,000 units.
Kia and Hyundai reported another strong month, with their best-ever March and Q1 results. Hyundai’s hybrid sales grew 68% YoY, while its EV sales were up 3%.
American Honda’s sales rose 5.3% in Q1 and 13.2% in March. It was the brand’s best March and best Q1 for electrified vehicle sales, per a news release. The BMW brand’s EV sales were up 26.4% YoY.
Toyota’s Q1 sales grew about 1%, while its EVs were up nearly 40% YoY. Ford’s sales fell 1.3% in Q1, but EVs and hybrids grew 11.5% and 32.9%, respectively.
Storm clouds: Analysts have been sounding the alarm that the Trump administration’s trade policies are likely to raise costs for automakers already contending with costly investments in electrification, very likely leading to price increases for consumers—exacerbating affordability issues in a market in which the average price of a new vehicle hovers around $45,000.
Per Cox’s data, there are currently only 27 vehicle models priced at $30,000 or below in the US, many of which are assembled in other countries.
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“After a near-term surge in buying, we expect sales to fall, new and used prices to increase, and some models to be eliminated,” Smoke said. “If the White House then pursues expanding the scope and applying the 25% duty to parts, we will see a negative impact on US production as well. Moreover, with 25% increases in the cost of parts, inflation would surge in maintenance and repair and insurance, which vehicle owners are already struggling to handle.”
Impact on EVs: EV sales were on track to grow 12% YoY in Q1, according to Cox.
“While we remain optimistic about EV sales in 2025, President Trump’s policies and tariffs will significantly impact the EV industry,” Stephanie Valdez Streaty, Cox’s director of industry insights, said in a statement. Not only are many EVs imported, she noted, but the US is heavily reliant on battery components from other countries—and EV adoption could be impacted by price increases from tariffs on Chinese graphite and on aluminum and steel.
Though Tesla produces its vehicles for the US domestically, it buys parts from abroad that are exposed to the tariffs—and a whole host of other challenges. Tesla reported Wednesday that its Q1 sales fell 13% YoY, The Verge reported.
Valdez Streaty noted that while Tesla has long been the EV market’s undisputed leader, that’s changing quickly thanks to growing competition, its aging lineup, and backlash over CEO Elon Musk’s right-wing politics and role in the Trump administration.
“The rapid pace of technological advancements and the emergence of new competitors are outpacing Tesla’s ability to maintain its early lead,” she said. “Without a significant change in strategy to develop new products with widespread appeal, Tesla’s high-water mark as an automaker may be in the past.”