‘The Party Is Over’ for Car Sales as Tariff Reality Kicks In
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The springtime surge in U.S. auto sales landed with a thud last month, setting up a slowdown in the months ahead as carmakers digest President Donald Trump’s tariffs on auto imports and consumers find fewer deals.
Shoppers rushed to showrooms as beating tariff-induced price increases became a motivation to buy, pushing up second-quarter sales an estimated 2.5% from the prior-year period, according to industry researcher J.D. Power.
That momentum has subsided. The annual automotive selling rate likely fell to 15 million in June — the slowest pace in the last 12 months — from 17.6 million in April as consumers grow cautious about big-ticket purchases over worries about the economy. With already high car prices expected to rise further as automakers manage billions of dollars in tariff costs, it may only get worse from here.
“The party is over,” Jonathan Smoke, chief economist for researcher Cox Automotive Inc., said in an interview. “It’s clearly slowing. It’s because of affordability getting worse and forcing what we think will be production declines to keep supply in balance.”
Smoke sees the annualized monthly rate of U.S. auto sales sticking around 15 million in the second half of the year, down from 16.3 million in the first six months of 2025. Last year, Americans purchased roughly 16 million cars and light trucks.
Sales have slowed at the Honda dealership Peter Petito manages in Queens, N.Y.,, after an uptick of buyers that he likened to a run on grocery stores before a blizzard.
It was like “there’s going to be a snowstorm and there’s no milk, juice or bread,” Petito said.
Car dealers polled recently by Cox reported that fears about the economy have become the No. 1 factor holding back their business, replacing high interest rates that had topped the previous two surveys earlier this year and late last year.
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“People are having a lot of uncertainty,” Beau Boeckmann, president of Galpin Motors, a major Ford dealer in southern California, said in an interview. “And during times of uncertainty, people put off a major purchase.”
The high cost of cars remains an impediment. After declining for much of last year, auto prices are on the rise again. The average cost of a new car reached $48,799 in June, up 1% from a year ago and 28% higher than in 2019, according to Cox.
“Given the impact of tariffs, prices are likely to start rising at a much faster rate,” Charlie Chesbrough, senior economist for Cox, told reporters last week. “Higher vehicle prices are coming to the new vehicle market.”
Automakers have so far refrained from large, across the board price increases. Instead, they’ve pulled other levers such as cutting incentive spending, or raising the price of select models affected by tariffs.
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Average monthly car payments reached a record $747 in June, up $22 from a year ago, according to J.D. Power. That has more people stretching car loans to 84 months — 7 years — which accounted for 12% of all auto financing last month, up 3 percentage points from last year.
The June slowdown was “a hangover from some of the sales that were pulled ahead,” said Mark Wakefield, global auto market lead for consultant AlixPartners. The firm predicts automakers will pass along 80% of the cost of Trump’s tariffs to consumers, driving up prices by nearly $2,000 per car.
“We don’t see the full pass-through until the end of the year,” he said.
Written by Keith Naughton, Jade Thomas and Gabrielle Coppola
