Cox Automotive Underscores Positive Future

The U.S. light-vehicle sales forecast for 2025 is positive at 16.3 million units, according to the scenario Cox Automotive consider most likely – but they’re also watching less-likely scenarios, which range from not bad to downright unthinkable.

The wild card is how far – and especially how fast – the second Trump Admin. can shake up the U.S. auto industry, in terms of tariffs and trade, plus safety and emissions regulations, says Jonathan Smoke, chief economist for Cox Automotive.

“Obviously, we know there are twists that could be coming, with policy shifts. But they are most likely to take time,” he says.

That’s good news for U.S. auto dealers for 2025 and possibly longer, Cox Automotive analysts say. Dealer sentiment is way up since the election, and fewer dealers cite “political climate” as a threat to business: 35% in a fourth-quarter poll, vs. 44% in the third quarter, Cox reports.

“Every department at franchised dealers should see growth in 2025,” as rising  inventory levels prompt increased incentives and affordability, say Cox analysts.

Cox Automotive is banking on bureaucratic inertia, political battling and maybe some economic realities to temper rapid changes that affect the auto industry.

“We are not making assumptions that any major new tariffs are adopted,” in 2025, although they could come later, Smoke says..

The not-bad scenario for 2025 is that the new Trump Admin. manages to execute some changes next year without having to rewrite legislation, he says.

An example could be closing a loophole that makes leased electric vehicles eligible for the full $7,500 federal tax break, even if they don’t otherwise meet rules for imported EVs, batteries and materials.

Cox Automotive doesn’t assign a volume number to the not-bad scenario, but no effect on U.S. auto sales is expected in the first half of 2025, and maybe not even until 2026. There could even be a “Trump bump” in sales if, for instance, EV buyers rush to beat a deadline to end tax breaks.

Then there are tariffs.

Tariffs on imports would be bad for auto sales, but one type of tariff in particular – threatened punitive tariffs between the U.S. and Canada and between the U.S. and Mexico – would be so bad economically for the Detroit Three automakers that it would be politically unlikely, Smoke says.

The Detroit Three, especially General Motors and Stellantis, but also Ford, rely heavily on units assembled in Canada or Mexico.

“It blows the mind and completely freezes up the market,” if punitive tariffs arise vs. Canada and Mexico after decades in which U.S. automakers set up their supply chains treating North America like a free-trade zone, Smoke says.

Cox Automotive considers the threat of high tariffs vs. Canada and Mexico could be “just early rhetoric” to stake out a bargaining position, Smoke says.

About 20% of Ford’s U.S. sales come from Canada or Mexico, and around 35% for Stellantis and GM, reports Cox Automotive.