US July sales of new light vehicles rose year on year and month on month, beating industry expectations, but the chief economist at the National Automobile Dealers Association (NADA) is maintaining its full-year forecast of 15.3 million units.
Year to date, US sales of new light autos are up by 4.6% on a seasonally adjusted basis, as shown in the following chart from NADA.
NADA said the year-on-year change could have been larger, but July 2024 sales data included sales that would have occurred in June 2024 were it not for the massive software outage that affected many dealerships across the country.
Affordability continues to create headwinds for the industry.
NADA cited data from JD Power & Associates estimating that tariffs are adding $4,275 in costs for vehicles, on average, keeping prices high and continuing to weigh on affordability.
“Many OEMs [original equipment manufacturers] reported significant impacts to their bottom line due to tariffs,” Patrick Manzi, NADA chief economist, said. “It remains to be seen how long OEMs can absorb the price hikes before passing the costs along to consumers. We expect to have more clarity on changing OEM pricing strategies in the fall as 2025 models transition to 2026 models.”
During a conference call to discuss Q2 earnings, Ford CEO Jim Farley said the company expects tariffs to be a $2 billion headwind in 2025.
General Motors posted a 31.6% drop in Q2 adjusted earnings, citing $1.1 billion in tariff costs net impact.
Industry analysts were anticipating increased activity in the electric vehicle (EV) market as just a few months remain before government tax incentives are set to expire, but while sales of battery EVs (BEVs) rose by 22.7% from the previous month, they were flat compared with the same month a year ago.
The same is true for market share year-to-date for BEVs, which totaled 7.4% – also flat year on year, NADA said.
Meanwhile, plug-in hybrids – some of which are also eligible for the EV tax credit – saw sales and market share decline slightly year on year.
The most popular alternative-fuel segment continues to be hybrids, according to NADA, which posted a 37.7% year-on-year sales gain in July 2025.
Year-to-date, hybrids have also picked up 3 percentage points of market share, as shown in the following chart from NADA.
DEMAND OUTLOOK
Jincy Varghese, ICIS demand analyst, said the auto industry remains exposed to trade tensions and is currently navigating a turbulent transition.
“EV sales are growing, but consumer interest remains mixed because of concerns over charging infrastructure, among others,” Varghese said. “The International Energy Agency’s (IEA’s) forecast EV sales will exceed 20 million vehicles worldwide, or in other words, one in every four vehicles sold will be EV. Meanwhile, traditional ICE vehicle production remained below pandemic levels in North America and Europe.”
Oxford Economics said in its North American 2025 outlook that higher costs and slower economic growth from the reciprocal tariff policy are expected to contribute to a 4% decline in sales for 2025.
“Optimal production schedules will vary by manufacturer, but tariffs will likely have a significant distortionary effect on North American production in 2025 and beyond,” Oxford said.
CHEMS USED IN AUTOS
Demand for chemicals in auto production comes from, for example, antifreeze and other fluids, catalysts, plastic dashboards and other components, rubber tires and hoses, upholstery fibers, coatings and adhesives.
Virtually every component of a light vehicle, from the front bumper to the rear taillights, features some chemistry.
The latest data indicate that polymer use is about 423 pounds (192kg) per vehicle.
Meanwhile, EVs and associated battery markets are an important growth opportunity for the chemical industry, with chemical producers separately developing battery materials, as well as specialty polymers and adhesives for EVs.
Source: icis