Retail momentum in the U.S. auto market slowed in May, with several automakers still reporting gains despite a cooldown from the tariff-driven sales rush seen in March and April. New vehicle purchases continued to rise, but at a more tempered pace, as Memorial Day deals and strong demand supported volume even as affordability concerns and inventory challenges mounted.
Toyota Motor North America led the month with an 11% sales increase, driven by high demand for hybrid models and strong performance from top-selling nameplates like the Tacoma, Camry, and Corolla. Electrified vehicles accounted for nearly half of Toyota’s May volume, with hybrid sales increasing by 39%.
Ford followed with a 16% overall gain, bolstered by a 25% rise in SUV and crossover sales and a 15% increase in F-Series pickup deliveries. The Lincoln brand surged 39%, aided by aggressive discounting through employee-pricing incentives.
Honda reported a 6.5% sales increase in May, with Civic, Ridgeline, Passport, and the all-electric Prologue offsetting weaker HR-V results. Honda’s electrified vehicle sales hit a new May record with over 37,000 units sold.
Hyundai and Kia continued their upward trajectory with their eighth consecutive month of growth. Hyundai saw a 7.7% increase, while Kia posted a 5.1% gain. Both companies were buoyed by crossover and hybrid sales, with several models setting May records. However, growth cooled from the double-digit gains reported earlier this year. Hyundai offered up to $3,000 off select models and held sticker prices steady through June 2 to soften the impact of new tariffs.
Genesis saw a 14% increase, led by a 57% jump in GV70 crossover sales, while Mazda’s deliveries fell nearly 19%, snapping a year-long growth streak. Subaru’s sales declined 10%, ending its 33-consecutive-month run of gains.
In total, six major automakers posted a combined 7.7% increase in U.S. light-vehicle sales last month. The retail selling rate is forecast to settle between 15.6 million and 16 million units, down from April’s 17.2 million pace.
While demand remains solid, analysts say the industry is beginning to feel the aftereffects of front-loaded sales activity from earlier in the year. Roughly 149,000 vehicle purchases were accelerated into March and April as buyers sought to avoid impending price hikes tied to the Trump administration’s tariffs on imported vehicles and parts.
These tariffs, which took effect in April and impact roughly half of all cars and light trucks sold in the U.S., have already prompted Ford, Hyundai, and Subaru to raise sticker prices.
Further, inventory levels remain under pressure. Total new-vehicle supply stood at 2.49 million units in early May, down 10.5% from a year ago. Retail inventory improved 23% year-over-year to 2.13 million units, but remained tight, with an average days’ supply of 57. Cox Automotive reports that brands like Toyota, Honda, Kia, and Lexus have the leanest supply.
Average transaction prices in May rose 1.4% year-over-year to $45,462 but dropped from April’s average, signaling some seasonal discounting. Meanwhile, incentives dipped to $2,563 per vehicle, and leasing accounted for just 20.7% of industry sales.
Consumer affordability remains a core concern. Interest rates remain elevated, and monthly vehicle payments reached a record $748 in May. Automakers are responding by pushing hybrid models and offering deeper financing incentives.
Analysts caution that May may mark the last month of positive year-over-year industry sales for 2025. With tariff pressures rising and inventory tightening, the second half of the year is expected to show slower growth, possibly even declines, unless trade conditions shift.
