Predicted 25% Decrease in January New-Vehicle Sales compared to December, with Year-Over-Year Increase

New-vehicle sales in January 2025 are anticipated to slow significantly compared to December. According to a forecast by Cox Automotive, sales volume for January is projected to hit 1.125 million units, indicating a steep 25.3% drop from the previous month. However, there is a 5.2% year-over-year increase compared to January 2024. The seasonally adjusted annual rate (SAAR) forecast for January is 15.8 million, an improvement over last year’s 15 million, albeit lower than December’s 16.8 million.
Charlie Chesbrough, senior economist at Cox Automotive, highlighted that the sales pace in November and December 2024 achieved the highest levels reported since spring 2021, predicting a slight dip in January. It is common to witness a decline in sales in January due to its low-volume nature, further affected by extreme weather conditions like winter storms and wildfires. However, inventory levels and incentives are better compared to the previous year, which may help cushion the seasonal slowdown.
Cox Automotive analysis indicates that new-vehicle inventory in the U.S. started January at around 2.88 million units, marking the first time since October that inventory levels dropped below 3 million. While there is a gradual tightening of inventory, levels remain higher than a year ago, enabling dealers to offer attractive incentives to attract buyers.
Looking ahead to the rest of 2025, Cox Automotive expects new light-vehicle sales to modestly improve, with an anticipated 16.3 million units sold by year-end. This marks a 2%-3% increase over 2024. Economic growth and improved buying conditions are expected to sustain this trend, although potential policy changes by the Trump administration, including tariff adjustments and EV tax credit modifications, could create difficulties later in the year.
Despite an anticipated slowdown in January, the market is predicted to demonstrate steady growth throughout 2025, provided there are no sudden economic or policy disruptions. The forecast points towards the new-vehicle market maintaining its strength and remaining resilient in the face of potential challenges, with a promising outlook for the remainder of the year.