The U.S. auto market is wrapping up 2024 with a 7.3% increase in December new vehicle sales, according to a joint report by industry consultants J.D. Power and GlobalData. While the year-end boost reflects resilient consumer demand, the growth rate is more modest than the 13% surge seen last December, signaling ongoing challenges in the market.
Why This Matters
The uptick in December sales highlights the strength of the new vehicle market despite pressures from high interest rates and affordability concerns. Automakers and dealers leaned on deeper discounts and improved inventory levels to close out the year strong.
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Key Insights Driving December’s Sales Growth
Steady Demand Amid Challenges
Thomas King, president of J.D. Power’s data and analytics division, credited resilient consumer demand, increased vehicle inventory, and a rise in leasing activity for the strong performance.
“While per-unit profits are declining, resilient consumer demand — assisted by increased inventory and leasing activity — has supported a solid year-end performance,” King noted.
By the Numbers
- December Sales: Estimated at 1.52 million units, despite having one fewer selling day compared to last year.
- Seasonally Adjusted Annualized Rate (SAAR): Expected to hit 17.2 million units, a notable increase of 1.1 million units year-over-year.
Electric Vehicle Sales Face Declining Interest
While traditional vehicles gained traction, interest in electric vehicles (EVs) dipped. Only 25% of new car buyers are considering an EV for their next purchase, down 2% from 2023.
This shift has impacted leading EV brands like Tesla, which saw its share of the EV market shrink in 2024. The dip reflects growing concerns about EV affordability, infrastructure readiness, and incentives.
Looking Ahead: What’s Next for the Auto Market
The U.S. auto market is projected to maintain modest growth into 2025. A report from S&P Global Mobility forecasts 16.18 million units in total new vehicle sales for next year, up 1.2% from 2024.
However, affordability challenges will remain a significant hurdle for sustained growth.
“Unfortunately, the new vehicle affordability issues that coalesced to constrain auto demand levels for much of 2024 will not be resolved quickly in 2025,” said Chris Hopson, manager of North American light vehicle sales forecasting for S&P Global Mobility.
December’s rise in vehicle sales caps a resilient year for the auto industry, but shifting consumer preferences and affordability concerns could shape the market’s trajectory in 2025. As automakers balance pricing strategies, inventory management, and the evolving demand for EVs, they face a pivotal year ahead.
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Stay tuned to TechExclusive for the latest updates in the auto industry and emerging trends in 2025.
