The automotive market has experienced a notable surge in sales during early April, primarily driven by consumers rushing to purchase vehicles ahead of anticipated tariff impacts and potential price increases. On today’s episode of Inside Automotive, we’re joined by Tom Kondrat, Global Lead for Advanced Analytics at Urban Science, who explains that the surge was front-loaded, with the first half of April outperforming March’s strong sales. However, by the end of April, sales had normalized as manufacturers reassured buyers that prices would remain stable, and inventory concerns had eased.
Sales trends
According to Kondrat, during the month of April, SUVs and minivans led the growth, with sales in those segments up 40%. Kondrat notes that consumers, in particular, prioritized securing vehicles for summer road trips amid concerns about availability. Despite this early momentum, dealers nationwide reported a slowdown, which Kondrat attributes to the front-loading of sales in March and April.
Overall, May sales are tracking roughly in line with the same period last year, with an expected 6% year-over-year increase primarily driven by two extra calendar days and one additional selling day.
Sales, regulatory changes, and market outlook
EV sales continue to be a highlight, with hybrid sales jumping 64% year-over-year in April. Battery electric vehicle (BEV) and internal combustion engine (ICE) sales showed modest increases of 4% each in April, with BEVs up just 3% so far in May, while ICE sales declined by 4%.
However, legislative developments have added complexity to the EV market. Congress recently terminated the California Advanced Clean Cars 2 emissions regulation, which was set to require that 35% of vehicle sales in 12 states and DC be zero-emission vehicles by the 2026 model year. Currently, these states average only about 18% of zero-emission vehicle sales, revealing a substantial gap in meeting regulatory targets.
Regulatory shifts
California itself, a major market driving EV adoption, has achieved about 26% zero-emission vehicle sales, but still falls short of its 2026 goal. Other states, such as Colorado and Washington, hover around 22-24%, while some states, like New York, lag at 9%, requiring a significant increase to comply. This regulatory uncertainty presents challenges for automakers and dealers as they build capacity to meet future mandates by utilizing a mix of plug-in hybrids and battery electric vehicles.
Tariffs have had a muted effect on consumer buying behavior so far this year, with some manufacturers hopeful for a resolution during the summer. Kondrat forecasts a seasonally adjusted annual rate (SAAR) of approximately 15.9 million vehicles for May, representing a 6% year-over-year increase when adjusted for extra selling days. However, June’s sales outlook remains uncertain, largely dependent on inventory availability. Dealer incentives are expected to tighten as supply diminishes, with some OEMs, such as Hyundai, maintaining stable base prices while adjusting their financing and incentive programs.
Looking ahead, Kondrat emphasizes the importance of legislative outcomes related to tax changes, particularly the fate of the $7,500 federal EV tax credit, which the House proposes to phase out by the end of this year. Such changes could accelerate EV purchases in the short term but potentially slow growth beyond 2024. Long-term, BEVs are expected to surpass hybrids around 2030-2031, driven by improvements in total cost of ownership, charging infrastructure, and battery technology.
Finally, Kondrat notes ongoing innovation in battery chemistry and charging speed, pointing to advancements such as five-minute full-charge batteries from China and GM’s new battery technologies, all of which will make EVs increasingly attractive and accessible in the years to come.
“In early April, we saw it come in like a lion and it went out like a lamb.” – Tom Kondrat
