Auto sales are cooling off just as the summer season begins. In today’s episode of Inside Automotive, Charlie Chesbrough, senior economist at Cox Automotive, joins host Jim Fitzpatrick to break down why early buying activity, tightening inventories and tariff pressures are setting the stage for a challenging stretch ahead for dealers.
New-vehicle sales for May rose slightly year-over-year, but the pace slowed to a seasonally adjusted annual rate of 15.6 million units, down from 17.3 million in April. Chesbrough attributes this drop to early pull-ahead demand triggered by tariff announcements in March, which likely drew forward 200,000 to 300,000 purchases that would have otherwise occurred during the summer.
Among automakers, Ford and Toyota posted the strongest gains in May, both achieving double-digit year-over-year increases. Ford benefited from simplified pricing strategies, while Toyota saw increased interest from consumers concerned about future price hikes. Meanwhile, Stellantis and Tesla continued to underperform. Stellantis is still dealing with a mismatched product mix, and Tesla faces brand-related challenges tied to CEO Elon Musk’s involvement in politics.
"Things are going to get a little bit tough this summer... I would suggest being prepared for that, and when you do get customers, give them your best pitch because there may not be a lot of them behind you." — Charlie Chesbrough
Looking forward, Chesbrough expects summer auto sales to remain subdued due to reduced demand, tighter inventory levels and rising vehicle prices. VAuto data shows a significant drop in dealer lot availability, which could also lead to fewer incentives. Cox Automotive is sticking with its full-year forecast range of 15.6 to 16.3 million vehicles but now leans toward the lower end, projecting roughly a 1% decline from 2024.
The electric vehicle market may still hit a new record this year, but that outlook hinges on federal tax credits. A House bill passed to eliminate the $7,500 EV credit could spark a year-end sales rush if the Senate follows suit, but would likely lead to a slowdown in 2026.
Chesbrough advises dealers to prepare for a slower summer and make the most of each customer interaction. Tightening inventories and the threat of further price hikes could drive urgency among buyers, but success will hinge on sharp sales execution, fixed ops focus and strategic inventory planning.
