US new-vehicle sales projected to slow in October

On the Dash:

• October U.S. new-vehicle sales are forecast to decline to a 15.7 million SAAR, down from September and last year.
• EV and PHEV sales are expected to slump sharply following the expiration of federal tax incentives.
• Full-year 2025 sales are projected at 16.1 million units, with used and CPO vehicle demand offsetting some new-vehicle slowdown.

U.S. new-vehicle sales are projected to slow in October after a strong third quarter, with Cox Automotive projecting a seasonally adjusted annual rate of 15.7 million units. This marks a decline from September’s 16.4 million pace and last year’s 16.1 million level. Analysts attribute the slowdown in part to falling electric vehicle (EV) and plug-in hybrid (PHEV) demand following the expiration of federal tax incentives.

Volume is expected to reach approximately 1.30 million units, down more than 3% from last year but up 2.7% compared with September. October features 27 selling days, matching last year and three more than the previous month. The higher cost of tariffed products replacing non-tariffed inventory is also expected to weigh on consumer demand.

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EV sales surged in the third quarter as buyers rushed to take advantage of expiring $7,500 federal tax credits. U.S. EV sales reached 438,487 units in Q3 2025, up 40.7% from the prior quarter and 29.6% year-over-year. With tax credits now expired, EV and PHEV sales are expected to retreat sharply in October, creating a new market dynamic for alternative powertrain vehicles.

Cox Automotive projects full-year 2025 new-vehicle sales between 15.8 million and 16.4 million units, with 16.1 million as the likely baseline. Strong third-quarter performance led the firm to adjust forecasts for fleet and new retail sales upward. Lease penetration is expected to decline slightly in the fourth quarter, dropping from 25% to 24% due to reduced EV leasing. Conversely, used retail and certified pre-owned (CPO) vehicle sales forecasts were revised higher to reflect ongoing demand.

The October slowdown signals a transition for the U.S. auto market. Rising prices and the expiration of incentives for electric and hybrid vehicles are reshaping consumer purchasing patterns. Dealers may face challenges sustaining sales momentum in the final months of 2025, while EV makers must adapt to a market no longer bolstered by government subsidies.