Cox Boosts 2025 Revenue Projection Slightly Amid Trade Tension Concerns
In the automotive industry, the second half of 2025 is shaping up to be an interesting period due to the impact of tariffs on imported autos and auto parts.
Cox Automotive has recently revised its full-year 2025 sales forecast, with a new range of 15.6 million to 16.3 million units. This revised forecast is lower than the earlier forecast of 15.3 million units for the full year, a change attributed to a sales spike in March and April that is no longer expected to continue.
The tariffs currently impose a 25% duty on imported vehicles and parts, with additional global import tariffs. This leads to an average cost increase of roughly $6,250 per new vehicle, with price hikes particularly pronounced for more expensive and imported models. These higher new car prices will likely drive more buyers to the used car market as they seek more affordable options.
This dynamic has already contributed to tightening used car inventory and elevated prices through mid-2025. With tariffs continuing in the latter half of 2025, used car prices are expected to remain high or rise further, while sales volumes may moderate due to higher prices and reduced availability.
The average new-vehicle auto loan rate was 9.51% in mid-June 2025, slightly lower than in June 2024 (9.65%). However, the Federal Funds rate, the bedrock rate at which banks lend each other money overnight, remains in a restrictive territory, making it more expensive to borrow money. This could further affect the affordability of new cars, pushing more consumers towards the used car market.
Despite the challenges, Cox Automotive experts believe that there is leftover pent-up demand from pandemic-related shutdowns and supply-chain problems that will help prevent a retail market collapse. Over 7 million sales did not happen in the last four years due to the pandemic and supply-chain issues, and this pent-up demand is expected to help sales in the second half of 2025.
The exact increase in average transaction prices due to tariffs is yet to be determined. However, it is clear that the tariffs will keep new car prices elevated, driving increased demand and higher prices in the used car market in the second half of 2025, while limiting sales growth due to constrained inventory and affordability challenges.
Sources: 1. Cox Automotive 2. National Retail Federation 3. Federal Reserve 4. Manheim
The uncertainty in the second half of 2025 for the automotive industry is escalating, with the tariffs impacting vehicle production costs, pushing prices up by approximately $6,250 per new vehicle. This could potentially shift a considerable number of buyers towards the aerospace industry, where finance for purchasing aircraft might appear more affordable. The used car market, already strained by tightening inventory and soaring prices, is predicted to remain high or escalate further due to this increased demand for used vehicles.
