Erin Keating, executive analyst at Cox Automotive, joins us on the latest episode of CBT Now to break down how the U.S. new vehicle market is showing moderation rather than retreat as the industry heads into the holiday season. With inventory levels rising, they remain below last year’s levels, reflecting disciplined production and pricing strategies by automakers.
According to Keating, inventory sits at an average of 88 days’ supply, with some brands, including Cadillac and Jeep, experiencing higher levels due to transitional production and leadership changes. While manufacturers are shifting focus to high-demand segments such as SUVs and full-size pickups, they are pulling back on underperforming models. Incentives have generally declined after earlier reliance on moving EV stock, reflecting both consumer affordability and manufacturer discipline.
The EV market has seen a sharp drop in sales following the expiration of incentives, but overall market share for 2025 is expected to reach 9–10%. Keating stresses that EV adoption is likely to continue growing as more vehicles enter mainstream driveways and the used EV market expands, though aggressive production cuts could slow momentum.
Additionally, consumer preferences continue to favor full-size vehicles, while minivan sales decline. Although luxury vehicles are set to perform well during the year-end sales season, mainstream brands are increasingly offering accessible luxury through their design, technology, and content. Tariff uncertainties and rising destination fees are likely to affect pricing in 2026. To address this, manufacturers will adjust trim levels to manage costs while preserving profit margins.
"Tariffs have absolutely impacted manufacturers' decision on releasing vehicles back into the wild, if you will, because they needed some time to catch up and figure out how to set MSRPs with the uncertainty around the tariffs."
Moreover, Keating highlights dealer networks as a stabilizing force in the market. Well-heeled consumers and targeted production strategies are expected to support end-of-year sales, with projected volumes of 15–16 million units focusing on profitable models. Potential disruptors include regulatory changes, tariff developments, and broader economic factors such as interest rates and midterm election outcomes.
The U.S. automotive market, Keating said, remains resilient, with manufacturers and dealers alike adapting to demand signals and market pressures as they prepare for the year ahead.
