Navigating the New Auto Tariff Reality: A Dealership’s Guide to Thriving in 2025

The automotive landscape is constantly evolving, but 2025 has introduced a significant new variable: the re-implementation of auto tariffs. These tariffs, essentially a tax on imported vehicles and parts, are designed to bolster domestic production. However, their ripple effect extends far beyond new car showrooms, profoundly impacting the used vehicle market and presenting both challenges and opportunities for dealerships like yours.

Understanding these shifts and adapting your strategy is crucial for not just surviving, but thriving in this new environment.

The Direct Impact: New Car Prices and the Domino Effect

On March 26, 2025, new 25% tariffs were announced on imported vehicles and their components, with passenger vehicle tariffs taking effect on April 3, 2025, and parts tariffs on May 3, 2025. These are in addition to existing duties, like the 2.5% import tariff on vehicles and the 25% “chicken tax” on light trucks. While USMCA-compliant vehicles and parts are exempt, and some offsets exist for U.S.-assembled cars, the overall impact is clear: new vehicle prices are rising.

Estimates vary, but analyses suggest average new vehicle price increases ranging from $2,500 to $20,000 for some imported models, and even $2,500 to $5,000 for some American cars due to global supply chain reliance. We’ve already seen new vehicle pricing jump 2.5% month-over-month in April 2025, more than double the typical rise. Automakers are reacting differently, with some like Ford increasing prices and GM projecting billions in tariff costs, while others like Mercedes-Benz, Toyota, and Honda aim to hold prices steady.

This direct impact on new car prices creates a powerful domino effect: as new vehicles become less affordable, a significant segment of consumers naturally shifts their attention to the used car market.

The Ripple Effect: Used Car Market Dynamics

While used vehicles aren’t directly tariffed, the surge in demand from new car buyers is putting upward pressure on pre-owned prices. Kelley Blue Book data shows the average used car price in April 2025 was $25,547, up $367 from March. The Manheim Used Vehicle Value Index also predicted continued price increases for used cars in the following weeks. If tariffs are fully enacted, expect used vehicle prices to rise significantly in Q3 and Q4 of 2025.

Key shifts in consumer behavior:

  • Holding onto vehicles longer: A substantial 41.1% of consumers are less likely to trade in their current vehicles, impacting your primary source of used inventory.
  • Anticipating price hikes: 81.7% of buyers expect car prices to rise, making them cautious about future spending.
  • Increased financing needs: As prices climb, more consumers will seek financing, potentially challenging F&I product attachment.
  • Demand for specific segments: Compact SUVs (Honda CR-V, Toyota RAV4, Hyundai Tucson) and full-size trucks (Ford F-150, Ram 1500, Chevrolet Silverado) are in high demand in the used market.
  • Higher maintenance costs: Tariffs on imported parts mean higher repair costs for existing vehicles, driving demand for reliable, low-maintenance used cars.

This creates a supply-demand imbalance: more buyers are looking for used cars, but fewer are trading them in. Late-model, low-mileage vehicles, ideal for CPO programs, will become scarcer and more valuable.

Broader Market Challenges and Dealership Pressures

Tariffs are just one layer of complexity. The market is already grappling with rising interest rates, inflation, and ongoing supply chain disruptions. This translates to “sticker shock,” “financing challenges,” and “longer wait times” for customers, stalling the car-buying journey. Overall car sales have already plunged 3.5%, with experts predicting a reduction of approximately 1 million units in total vehicle sales due to tariffs alone.

Beyond sales, tariffs on parts will increase repair costs. Parts account for 50% of typical claim costs, and about half of these are imported. Mechanical repair claim costs are projected to increase by 3% to 6%, not even accounting for potential supply chain delays or labor cost increases.

Strategic Imperatives for Dealerships: Adapting to the New Reality

To navigate this complex environment, dealerships must be agile and proactive.

  1. Optimize Used Car Operations:
    • Expand CPO Programs: Heavily promote Certified Pre-Owned vehicles, especially late models (1-3 years old), as attractive, value-driven alternatives to new cars.
    • Aggressive Sourcing: Increase sourcing from wholesale auctions, direct trade-ins, and lease returns. Offer competitive valuations and incentives to encourage trade-ins.
    • Speedy Reconditioning: Get used cars “front-line ready faster” to minimize holding costs and maximize sales velocity.
    • Focus on Demand: Prioritize sourcing and marketing high-demand models like compact SUVs and full-size trucks. Highlight models known for strong resale value and reliability (e.g., Toyota Tacoma, Honda Civic).
  2. Adjust Pricing and F&I Strategies Thoughtfully:
    • Real-Time Pricing: Utilize sophisticated tools for dynamic pricing adjustments, balancing profitability with affordability.
    • Creative Financing: Offer flexible payment solutions like extended terms or leasing to help customers manage monthly budgets.
    • Transparent Communication: Educate customers on tariff impacts, market conditions, and value propositions clearly.
  3. Proactive Customer Engagement:
    • “Act Soon” Messaging: Advise customers that delaying a purchase, new or used, could lead to higher costs.
    • Highlight “Tariff-Free” Inventory: Promote vehicles imported before tariffs took effect as an immediate incentive.
    • Emphasize Trade-In Benefits: Lock in current vehicle values for customers before potential market shifts.
    • Focus on Total Value: Shift sales conversations from just sticker price to long-term value, reliability, and lower maintenance needs.
  4. Supply Chain and Service Adaptations:
    • Optimize Vendor Relationships: Review existing parts and service vendors to identify cost-saving opportunities and mitigate tariff impacts.
    • Improve Parts Sourcing: Reduce reliance on heavily tariffed components by exploring domestic alternatives or USMCA-exempt suppliers.
    • Aggressively Market Service: With consumers holding onto vehicles longer and repair costs rising, your service department is a critical profit center. Promote comprehensive maintenance offerings.

Building Resilience

The 2025 auto tariffs are reshaping the industry, particularly by driving demand into the used car market. Dealerships that embrace data analytics, adapt their inventory and pricing strategies, engage customers as trusted advisors, and strengthen their service operations will be best positioned for success.

Resilience in this volatile market will come from your agility, your deep understanding of evolving consumer needs, and your ability to adapt swiftly to shifting supply chain realities. By implementing these strategic imperatives, AdvancedDealerSolutions.com believes your dealership can not only navigate the current challenges but also emerge stronger and more profitable.

The AI Revolution in Car Dealerships: A Game-Changer for the Industry

AI Revolution in Car Dealerships

The automotive industry is on the brink of a massive transformation, driven by the rapid adoption of artificial intelligence (AI). As AI technology continues to evolve, it is reshaping the way car dealerships operate, enhancing customer experiences, and streamlining business processes.

The Shift to AI-Powered Dealerships

AI is making its presence felt in various aspects of the car dealership experience. From AI-powered chatbots and virtual assistants to advanced data analytics and predictive maintenance, dealerships are leveraging AI to improve efficiency and customer satisfaction. One of the most significant changes is the integration of AI in customer interactions. AI chatbots and virtual assistants are now handling customer inquiries, scheduling test drives, and providing personalized vehicle recommendations. This not only frees up staff to focus on more complex tasks but also ensures that customers receive timely and accurate information.

Enhancing Customer Experience

AI is revolutionizing the way customers interact with dealerships. Virtual assistants can provide instant responses to customer queries, reducing wait times and enhancing the overall customer experience. Additionally, AI-driven data analytics can help dealerships understand customer preferences and behavior, allowing them to offer personalized recommendations and promotions. For instance, AI can analyze a customer’s browsing history and suggest vehicles that match their preferences, making the car-buying process more efficient and enjoyable.

Streamlining Operations

AI is also transforming the operational side of car dealerships. Predictive maintenance, powered by AI, allows dealerships to anticipate and address potential issues before they become major problems. This not only improves the reliability of vehicles but also reduces downtime and maintenance costs. Furthermore, AI can optimize inventory management by predicting demand and ensuring that the right vehicles are available at the right time. This helps dealerships maintain a balanced inventory and avoid overstocking or understocking issues.

The Future of Car Dealerships

As AI technology continues to advance, its impact on car dealerships will only grow. The integration of AI in various aspects of dealership operations is expected to lead to increased efficiency, improved customer satisfaction, and higher profitability. Dealerships that embrace AI will be better positioned to meet the evolving needs of their customers and stay ahead of the competition. In conclusion, the AI revolution is transforming the car dealership industry, bringing about significant changes in customer interactions, operational efficiency, and overall business performance. As dealerships continue to adopt AI-powered solutions, they will be able to provide a more seamless and personalized experience for their customers, ultimately driving growth and success in the industry.

The Advanced News October 2024

First and foremost, our thoughts and prayers go out to all those affected by last weeks storms in the Southeast. We sincerely hope everyone finds a way to safely navigate through the aftermath. Please take a moment to click the link below to donate to a relief fund to provide aid to those in need. 

Trick or Treat?
 
That is the question most of us in the industry are asking ourselves about what the next few months of this year have in store for us.
 
Here are just a few of the bigger questions out there…
 
Will the interest rate cuts accelerate, or slow car sales?
Will the election breed confidence or fear into the markets?
Will the juxtaposition on EV’s cause more manufactures to transition away from the segment?
Will the market look more reasonable in terms of Blue Sky in 2025?
What is the turnaround time for Stellantis?
 
All of these are good, legitimate questions and depending on how they are answered could drastically change how the industry’s future unfolds.
 
As our team crisscrosses the country speaking with dealers and other industry leaders, one thing we have learned for sure; we are past the COVID days of volume and profits. Dealers are working to find new ways to add gross profit, new ways to compete for customers, and new ways to train (and in some cases, retrain) their staff. The good news is, we at ADS have the solutions.
 
Even though the industry has seen decreases in F&I profitability, our dealers are still holding strong, and even seeing increases. Our dealers are adding Repaired Forever (see below) as a new profit center to their dealerships, and are utilizing ADS and its decades of retail experience to help their teams continue to grow and thrive!
 
Good luck and good selling to all of you!

Sincerely,
Bob and Ryan
 
 

View the full newsletter: https://mailchi.mp/advdealer.com/november-newsletter-4vmogzv35y-17464034

The Advanced News September 2024

We kicked August off by celebrating our 10-year anniversary in grand fashion. A party appropriate for a decades long run of exceeding our dealer’s goals and objectives. As we rolled through the month, we highlighted each our associates who are the ones who make it happen day in and day out. Please check out our LinkedIn page to read up on each of our team members to get to know them better. Also, be on the lookout for an announcement of our newest team members later this month.
 
Now we turn our attention to the next decade and beyond, and what better time to discuss the advantages of working with a truly independent advocate for your business. According to recent publications, inventory levels are up 43%, F&I profits are down 23%, and the market is showing signs of getting more and more difficult as we move into 2025.
 
Dealer after dealer has told us how their current provider is letting them down, allowing results to suffer, not minding the profitability of their participation structures, and basically just operating on cruise control. The old way of working with dealers, and taking advantage of relationships, is no longer acceptable. There is a better way.
 
As we continue to work with a growing number of dealers, we are seeing the results of our comprehensive approach to improve F&I sales and profitability and can proudly say that our stores are bucking the industry trends of going backwards. We have many dealers, and dealer groups setting F&I records due to our unique sales process, and our integrated levels of accountability. To find our more, please reach out to us to see if there are F&I profits being left on the table at your store.
 
To infinity and beyond…
 
Good luck and good selling to all of you!

Sincerely,
 
Bob and Ryan

IN THE NEWS 
J.D. Power-GlobalData U.S. Automotive Forecast for August 2024
Ford slows EV plans, delaying pickup and axing three-row SUV, to cut costs
Restaurants fight back against the FTC crackdown on ‘junk fees’ as diners balk at new charges
Stellantis laying off 2,450 plant workers due to discontinuation of Ram ‘Classic’ pickup truck

EVENTS WE WILL BE ATTENDING 
Live2Lead – https://www.eventbrite.com/e/live2lead-cleveland-tickets-937395323647?aff=oddtdtcreator
RVDA – https://www.rvda.org/Convention
F&I Product and Reinsurance Conference – https://www.fandi-conference.com/

Good Luck and Good Selling!

View the full newsletter https://mailchi.mp/advdealer.com/september-newsletter-4vmogzv35y-17389104

The Advanced News August 2024

August is a big month for us here at Advanced Dealer Solutions, as we are celebrating our 10-year anniversary!
 
In 2014, Bob felt dealers needed an independent advocate working tirelessly on their behalf. Not just with income development, but claims management, loss ratios, reinsurance results, capital to fund acquisitions, and so on. Dealers didn’t need another person working for vertically integrated company, somebody reporting up to a private equity firm, or someone being mandated sales goals from a corporate tower. Dealers needed an unbiased company whose primary goals were to exceed the dealer’s goals and objectives.
 
That independent, unbiased spirit remains at the core of who we are and what we do. We work for our dealers, PERIOD! Throughout these past 10 years, we have achieved tremendous success in collaboration with our dealers and product partners, more than most people could have imagined.
 
Although we may be celebrating our 10-year anniversary, we are just getting started and I assure you, you ain’t seen nothing yet!
 
To infinity and beyond…
 
Good luck and good selling to all of you!

Sincerely,
 
Bob and Ryan

IN THE NEWS
CarShield fined $10 million for deceptive advertising charges
Cox Automotive Forecast: New-Vehicle Sales Pace Expected to Rebound After June Disruptions
CrowdStrike sued by shareholders over global outage
Wharton’s Jeremy Siegel says Fed needs to make an emergency rate cut

EVENTS WE WILL BE ATTENDING 

NAMAD – https://web.cvent.com/event/edcd733e-ea51-4261-842b-30b68f704934/summary
RVDA – https://www.rvda.org/Convention
F&I Product and Reinsurance Conference – https://www.fandi-conference.com/

Good Luck and Good Selling!

View the full newsletter https://mailchi.mp/advdealer.com/august-newsletter-4vmogzv35y

Auto incentives are back — but high interest rates weaken deals for buyers

KEY POINTS

  • Incentives are coming back to the auto market, but interest rates remain high.
  • However, car shoppers can still reap the benefits. It will require more research and flexibility.
  • “Consumers can find good deals, but you have to go model by model,” said Brian Moody, executive editor at Kelley Blue Book.

Incentives are coming back to the auto market, but high interest rates are weakening those deals for car shoppers.

“Pre-pandemic, people would see a 0% financing for 60 months and think, ‘no big deal,’ because it was available everywhere,” said Jessica Caldwell, an insights analyst at Edmunds, an auto research site.

In today’s market, consumers are more likely to see it as “free money,” she said, especially as auto loan rates stay high.

The average annual percentage rate for a new car loan was 7.1% in the first quarter of 2024, marking the fifth month in a row of rates more than 7%, according to Edmunds.

The APR for used car loans rose 11.7% in the same period, up one-tenth of a percentage point from the prior quarter.

Despite high borrowing costs, car shoppers can still reap some benefits from reintroduced financing offers and other incentives like discounts and dealer cash. But shoppers must to do more research than in that earlier era to find those deals, experts say. 

“Consumers can find good deals, but you have to go model by model,” said Brian Moody, executive editor at Kelley Blue Book.

Be cautious about longer loan terms

Financing offers depend in part on the loan term. You might get a better interest rate with a short term, but a lower monthly payment with a long term.

While extending the life of the loan can help shrink monthly costs, you risk owing more than what the car is worth, which can create more financial problems later on, experts say.

“The negative equity situation is real,” Edmunds’ Caldwell said.

Shoppers must be realistic about how long they plan to keep the car, Caldwell explained.

If you’re someone who buys a new car every three to four years, you might end up in a situation when you trade in that your vehicle and is worth less than you owe, she said.

The share of new car purchases in that situation — known as a negative-equity trade-in — rose to 23.1% in the first quarter, according to Edmunds. That’s up from 18.3% from a year ago and 14.7% in the first quarter of 2022.

The average amount of negative equity jumped to an all-time high of $6,167 in the first quarter, researchers found.

When you roll that into your new car loan, it increases your payment.

The average monthly payment for new car shoppers who traded in underwater loans was $887 in the first quarter, according to Edmunds. The average APR was 8.1% for a term length of 75.8 months.

When you’re comparing financing options, instead of only focusing on lowering the monthly payment, be sure to figure out the total interest you will be paying, experts say.

“That’s where you have to be cognizant,” Caldwell said. “Longer loan terms will always look more attractive because they’re more affordable, but that’s really only part of the story.”

According to Moody: “The quicker you pay it off, the less interest you’re paying.”

What to do before you go to the auto dealer

1. Search for available incentives: Car shoppers will have to a do lot more shopping and research to find available incentives, Caldwell said.

“There are deals creeping out there,” she said. “There was a point two years ago where there just wasn’t any; no deals to be had.”

Seek out models that are not in high demand, as automakers and dealers “rarely incentivize popular” models, Moody said.

“There might be cash back or low financing on one type of Ford, but on [another] type, there’s nothing,” Moody said. “It makes it more challenging for consumers because you really have to go and do your research.” 

2. Know your credit score: While shoppers might come across 0% financing offers, those deals are often reserved for buyers with excellent credit. Find out what your latest score is to avoid getting stuck into deals you didn’t fully understand, Moody explained.

3. Get pre-qualified for different loans: Shop around for auto loans at different banks or credit unions before going to the dealer, experts say.

That lets you determine what kind of interest rate you’re able to get and compare offers, Moody said.

Don’t limit yourself to comparing the monthly payments. Consider the amount of interest you will be paying over the life of the loan, Caldwell said.

Having these options will also help you negotiate with dealers.

“Always give the dealer the opportunity to beat that deal in terms of interest rate and the loans terms, and oftentimes, they can,” Moody said. “If they can’t, you already have this loan.”

Originally published by CNBC https://www.cnbc.com/2024/05/16/despite-auto-incentives-high-interest-rates-weaken-deals-for-buyers.html?__source=iosappshare%7Ccom.microsoft.Office.Outlook.compose-shareextension

Wholesale Used-Vehicle Prices Declined in April

Wholesale used-vehicle prices (on a mix, mileage, and seasonally adjusted basis) were down in April compared to March. The Manheim Used Vehicle Value Index (MUVVI) fell to 198.4, a decline of 14.0% from a year ago. The seasonal adjustment to the index magnified the results for the month, resulting in a 2.3% month-over-month decrease. The non-adjusted price in April decreased by 0.6% compared to March, moving the unadjusted average price down 11.9% year over year.

Go to coxautoinc.com (April-2024-Manheim-Used-Vehicle-Value-Index-image subpage)

In April, Manheim Market Report (MMR) values saw weekly decreases that were slightly above long-term averages during each week of the month. Over the last four weeks, the Three-Year-Old Index decreased an aggregate of 1.6%, including a decline of 0.5% in the last week of the month. Those same five weeks delivered an average decrease of 1.0% between 2014 and 2019, illustrating that depreciation trends are currently tracking higher than long-term averages for the year.

Over the month of April, daily MMR Retention, which is the average difference in price relative to the current MMR, averaged 98.3%, meaning market prices fell below MMR values and declined against March as well, which was 99.4%. The average daily sales conversion rate dropped to 59.6%, showing that demand declined relative to March, which is seasonally normal for this time of year. For comparison, the daily sales conversion rate averaged 60.4% in April during the last three years.

The major market segments all experienced seasonally adjusted prices that were down year over year in April. Compared to April 2023, luxury was the only segment that lost less than the industry, down just 12.9%, and SUVs were down a little more than the market, falling by 14.6% year over year. The worst-performing segment was compact cars, down 17.6% against last year, followed by midsize cars, off by 16.8%, with pickups down 15.2%. Compared to last month, the pickup segment fell by just 1.3%, less than the market’s decline of 2.3% for the month. Compact cars fell the most against March, declining by 3.9%, luxury was down 3.2%, SUVs decreased by 3.1%, and midsize cars were down 3.0%.

Go to coxautoinc.com (April-2024-MUVVI-sales-distribution-by-market-class subpage)

With the increase in interest in electric vehicle (EV) values versus the non-EV market, we are working on sharing metrics for those segments. Seasonally adjusted EV values for April 2024 were down 17.5%, while non-EVs were down 13.1% year over year. Regarding values against last month, seasonally adjusted EV values declined in line with the market, falling by 2.6% from March 2024, while non-EVs declined 3.0% over the same period.

Retail Used-Vehicle Sales Decreased in April

Assessing retail vehicle sales based on observed changes in units tracked by vAuto, we initially estimate that retail used-vehicle sales in April were down 4% compared to March but higher year over year by 9%. The average retail listing price for a used vehicle was up 2% over the last four weeks.   

Using estimates of retail used days’ supply based on vAuto data, an initial assessment indicates April ended at 45 days’ supply, up two days from 43 days at the end of March but down one day from April 2023 at 46 days.

April’s total new-light-vehicle sales were down 3.3% from last year, and volume was down 9.1% from March. The April sales pace, or seasonally adjusted annual rate (SAAR), came in at 15.7 million, up just 0.4% from last year and up slightly from March’s 15.6 million level. 

Combined sales into large rental, commercial, and government fleets declined 5.6% year over year in April. Including an estimate for fleet deliveries into dealer and manufacturer channels, the remaining retail sales were estimated to be down 1.2% from last year, leading to an estimated retail SAAR of 12.9 million, up 0.2 million from last year’s pace, and up from March’s 12.8 million level. Fleet market share was estimated to be 17.5%, down from last year’s 19.3% share. 

Rental Risk Prices Mixed; Mileage Declines Slowed in April

The average price for rental risk units sold at auction in April declined 12.2% year over year. Rental risk prices increased by just 0.2% compared to March. Average mileage for rental risk units in April (at 58,800 miles) continues to be down compared to a year ago but much less than recent periods, declining by only 1.3% against April 2023. Mileage for units in April was up 12.1% from March.

All Measures of Consumer Confidence Saw Declines in April

The Conference Board Consumer Confidence Index® declined 5.9% in April, as views of both the present situation and the future declined. As a result of the decline, consumer confidence was down 6.5% year over year. Plans to purchase a vehicle in the next six months declined but remained higher year over year. According to the sentiment index from the University of Michigan, consumer sentiment declined 2.8% in April but was up 21.2% year over year. The median consumer expectation for inflation in a year jumped to 3.2%, its highest level since November, and the expectation for five years increased to 3.0%, which was also the highest since November. The consumer’s view of buying conditions for vehicles declined to the lowest level since December as views of both interest rates and prices deteriorated. The daily index of consumer sentiment from Morning Consult was very volatile in April and ended up declining by 1.6% for the month, leaving the index up by 7.3% year over year. Gas prices increased in April. The national average price for unleaded gas from AAA increased 3.6% from the end of March to $3.66 per gallon, which was up 2% year over year.

Link to the full article https://www.coxautoinc.com/market-insights/april-2024-muvvi/

The Advanced News

June 2024
A Message From The ADS Team
We hope you all had a fantastic Memorial Day Weekend and found time to enjoy the sun, lake, pool, or BBQ with friends and family. Equally, we sincerely hope the tragic storms that wreaked havoc across the country over the last couple weeks steered clear of you, your families and your dealerships.
 
This is always an exciting time of year for the ADS team. As the country celebrates the unofficial start to summer, we celebrate the official start to prime selling season for the dealers we are fortunate to work with and support. By all accounts, sales, as a whole, continue to meet or exceed expectations. Although many prognosticators predicted the downfall in F&I performance during the post COVID era, we at ADS, are honored to say our stores are holding pace, and even setting new records in PVR and PPRU. There are many contributing factors to this, but the basis is our incredibly talented team, our unique F&I sales process, and the support and accountability we provide our stores. If you are interested in learning how to improve your F&I process, profitability, reinsurance performance, etc. please contact us to see if we are the fit you are looking for.

Sincerely,
 
Bob and Ryan

IN THE NEWS 

Wholesale Used Vehicle Prices Decline in April
PERSONAL FINANCE
Auto incentives are back — but high interest rates weaken deals for buyers
US Economic Outlook May 2024 
Why Dealer’s Switch from DOWC’s to ARC’s
What Does Gen Z Want in F&I Products?
 
EVENTS WE WILL BE ATTENDING 

NAMAD – https://web.cvent.com/event/edcd733e-ea51-4261-842b-30b68f704934/summary
RVDA – https://www.rvda.org/Convention
F&I Product and Reinsurance Conference – https://www.fandi-conference.com/

 
Good Luck and Good Selling!

View our full newsletter https://mailchi.mp/advdealer.com/june-newsletter-6oe2lwzsev

EV Sales Growth Slows; Market Leader Tesla Stalls

Electric vehicle (EV) sales growth in the U.S. continues to slow, according to sales data analyzed by Kelley Blue Book. In the first quarter of 2024, Americans bought 268,909 new electric vehicles, according to Kelley Blue Book counts. EV share of total new-vehicle sales in Q1 was 7.3%, a decrease from Q4 2023.

While annual EV sales continue to grow in the U.S. market, the growth rate has slowed notably. Sales in Q1 rose 2.6% year over year, but fell 15.2% compared to Q4 2023. The increase last quarter was well below the previous two years.

In Q1 2023, EV sales volumes were up 46.4% year over year and 15.5% quarter over quarter. In Q1 2022, EV sales were higher by 81.2% year over year and 20.4% higher than the previous quarter.

“Electric vehicle sales in the U.S. declined during Q1 2024 – the first quarter-over-quarter downturn since Q2 2020,” said Stephanie Valdez Streaty, director of Industry Insights at Cox Automotive.

“As anticipated, Tesla’s sales took a hit, influencing the overall market dynamics. However, a few brands saw significant EV sales increases, achieving over 50% year-over-year growth. As noted in January, we are calling 2024, ‘the Year of More’. More new products, more incentives, more inventory, more leasing and more infrastructure will drive EV sales higher this year. Even so, we’ll continue to see ups and downs as the industry moves towards electrification.”

Analysts at Cox Automotive had expected a slowdown in EV sales growth. Segment growth typically slows as volume increases. This is certainly true with the market leader Tesla, which reported notably lower global deliveries in Q1 2024.

According to Kelley Blue Book estimates, Tesla sales in the U.S. were down 13.3% year over year – well below the typical double-digit growth that had become routine with the Tesla brand. Tesla’s share of the electric vehicle market in Q1 2024 was 51.3%, down from 61.7% one year earlier.

Though the overall year-over-year growth was minimal in Q1, nine manufacturers recorded more than 50% year-over-year growth in EV sales – BMW, Cadillac, Ford, Hyundai, Kia, Lexus, Mercedes, Rivian and Vinfast.

Q1 2024 EV SHARE OF TOTAL BRAND SALES
Go to coxautoinc.com (Q1-2024-EV-share-to-brand-sales-revised-chart subpage)

Notably, lower prices have supported EV sales volume in the U.S., particularly for key Tesla models. The average transaction price for a new EV in Q1 was $55,167, a 9.0% decrease compared to Q1 2023 and down 3.8% quarter over quarter. Tesla’s average transaction price was $52,315 in Q1, down roughly 13.5% year over year. However, lower prices did not generate higher volume.

Many automakers have followed Tesla’s lead and slashed prices. Incentive spending on EVs has increased notably in the past year, another sign of slowing demand. Leasing, too, has increased. In Q1, roughly 27% of all EVs were leased, more than double from the year before. With leasing, many buyers can qualify for the full $7,500 incentive the Inflation Reduction Act offers.

One bright spot in Q1: Strong EV sales from luxury makers, suggesting the EV market continues to be luxury-driven. Cadillac achieved a 499.2% year-over-year increase in electric vehicle sales due to robust sales of its Lyriq model. At Mercedes, EV sales were up 66.9%. BMW posted a 62.6% increase in EV sales compared to Q1 2023. At Audi, Q1 EV sales grew 28.8% year over year.

Meanwhile, sales of the most affordable EV in the U.S. – the Chevy Bolt – have been temporarily halted. Bolt sales fell 64.3% year over year in Q1, hitting just 7,040, as production stopped. A new version of the Bolt is expected to launch in 2025. On the non-luxury side, Ford achieved an 86.1% year-over-year increase in Q1 EV sales with the second-highest EV sales volume behind Tesla.

Cox Automotive forecasts EV sales in the U.S. to increase year over year in 2024, making this year the best year ever for EV sales. Analysts expect EV sales to reach roughly 10% of the market by the end of the year, up from 7.3% in the first quarter.

Originally posted by Cox Automotive- https://www.coxautoinc.com/market-insights/q1-2024-ev-sales/#:~:text=Electric%20vehicle%20(EV)%20sales%20growth,a%20decrease%20from%20Q4%202023

Stellantis sales drop 10% in first quarter

Stellantis NV sales dropped 10% in the first quarter compared to last year, with its Ram and Dodge brands suffering the steepest sales declines.

The transatlantic automaker, which also offers Chrysler, Jeep, Fiat and Alfa Romeo in the United States, sold 332,540 vehicles in the first three months of the year compared to 368,327 a year ago. Bright spots were Jeep, which saw a 2% uptick due to several popular vehicles including its plug-in hybrids, as well as a 9% rise for Chrysler sales thanks to its Pacifica minivan.

“As Jeep prepares to deliver its first fully electric vehicle, the Jeep Wagoneer S, in the U.S. in the second quarter, the brand saw significant growth across its portfolio in Q1, and the Jeep Wrangler 4xe and the Jeep Grand Cherokee 4xe are currently ranked the No. 1 and No. 2 best-selling hybrids in the country,” Jason Stoicevich, Stellantis head of U.S. sales, said in a statement. “2024 will be a transformative year for the company and our consumers, and our focus and commitment remain on delivering best-in-class products across Stellantis’ diverse portfolio.”

The sales drop-off was in contrast to most other automakers, which reported strong year-over-year sales increases this week. However, General Motors Co., Kia Corp. and Tesla Inc. had declines. GM reported a sales drop of 1.5% year-over-year to 594,233 in the first quarter.

In the first quarter of 2023, Stellantis also witnessed a 9% decline in sales. For all of 2023, however, it saw just a 1% sales decline in the United States compared to 2022.

Stellantis highlighted the healthy sales of its plug-in hybrids for the quarter, which increased 82%. The automaker noted that its Jeep Wrangler 4xe, Jeep Grand Cherokee 4xe, Dodge Hornet R/T and Chrysler Pacifica Hybrid took four of the five top spots for best-selling hybrids in the country as of last year. The company is getting set to launch eight fully battery-powered vehicles in the United States by the end of 2024.

Jeep’s sales were positive thanks to healthy sales of its Compass, Renegade, Wagoneer and Grand Wagoneer. Sales of the popular Grand Cherokee and Wrangler models were about flat.

Ram saw steep sales declines, including of its ProMaster vans, but noted the 2025 Ram 1500 is arriving at dealerships now. Dodge saw sales declines of its Charger and Challenger — which ended production last year — and Durango SUV, though it is releasing an all-new electrified Charger in the coming months.

Originally published by The Detroit News https://www.detroitnews.com/story/business/autos/chrysler/2024/04/03/stellantis-sales-drop-10-in-first-quarter/73179553007/