The U.S. automotive industry is gearing up for a notable uptick in activity as spring rolls in. Forecasts from industry analysts point to a significant boost in new vehicle sales for March 2025, driven by strong consumer demand and shifting economic factors. Yet, beneath the surface of this growth lies a complex mix of challenges, including looming tariffs and persistent affordability concerns. Let’s dive into what’s fueling this surge, what it means for buyers and sellers alike, and how the landscape might evolve in the coming months.
A Robust Start to Spring
According to a joint forecast by J.D. Power and GlobalData, total new-vehicle sales for March 2025 are projected to hit 1.5 million units, reflecting a 9.6% increase from March 2024. This figure encompasses both retail and non-retail transactions, painting a picture of a market on the move. When adjusted for selling days—March 2025 has one fewer than the previous year—the growth still holds at a solid 5.5%. For context, the seasonally adjusted annualized rate (SAAR) is expected to climb to 16.8 million units, a jump of 1.2 million from last year.
Retail sales, which focus on consumer purchases, are set to lead the charge. Analysts predict 1.3 million new vehicles will roll off lots into driveways, a 13% leap from March 2024 when adjusted for selling days. Even without that adjustment, the increase clocks in at 8.9%. The first quarter of 2025 as a whole is shaping up to be strong, with retail sales projected at 3.2 million units—up 8.4% from Q1 2024—and total sales reaching 3.9 million units, a 5.3% rise year-over-year.
Thomas King, president of J.D. Power’s data and analytics division, describes this as a continuation of a now six-month streak of retail sales growth. “March results reflect robust consumer demand,” he notes, highlighting how buyers are stepping up despite an uncertain economic backdrop. But what’s driving this momentum, and why now?
Tariffs Stir the Pot
A key factor behind the March surge is the shadow of new tariffs. On April 2, 2025, an executive order signed by President Donald Trump will impose a 25% tariff on cars and light trucks built outside the U.S. Described as “permanent” by Trump, this policy has already begun to ripple through the industry. King points out that consumers are accelerating purchases to get ahead of potential price hikes, a trend that’s boosting March figures. “The 13% year-over-year retail sales increase is particularly strong,” he says, crediting this preemptive buying spree.
The tariff uncertainty isn’t just affecting buyers. Manufacturers and dealers, expecting higher costs, have held off on ramping up discounts despite rising inventory levels. Typically, growing stock on lots would trigger price cuts to move units, but that hasn’t happened yet. King calls this a “modest” preview of broader disruptions that could unfold as the industry braces for the tariff’s full impact. For now, new-vehicle sales expected to rise 9.6% in March are buoyed by this dynamic, but the longer-term effects remain unclear.
Prices and Payments: A Double-Edged Sword
While sales are climbing, so are costs. The average retail transaction price for a new vehicle in March 2025 is forecasted at $44,849, up $637 from a year ago. Though this falls short of the all-time high of $47,329 set in December 2022, it’s a reminder that vehicles aren’t getting cheaper. Monthly finance payments are also ticking upward, projected to reach $731—an increase of $12 from March 2024 and a record for the month. Interest rates, hovering at 6.82%, aren’t offering much relief either, holding steady from last year.
Incentive spending tells a similar story. For trucks and SUVs, which are expected to make up 81.3% of retail sales, manufacturers are shelling out an average of $3,174 per unit, up $197 from March 2024. For cars, that figure is $2,515, a $286 increase. These upticks suggest that while discounts exist, they’re not growing fast enough to offset rising prices or ease affordability concerns.
Affordability Under Pressure
Affordability remains a stubborn hurdle for the industry. Even with sales on the rise, the pace hasn’t returned to pre-pandemic levels, and the tariff threat could widen that gap. Higher transaction prices and monthly payments are already stretching budgets, and the anticipated cost increases from tariffs could push more buyers out of the market. J.D. Power analysts warn that as these pressures mount, affordability will likely take centre stage in industry discussions.
King frames this as part of a broader trend: “The U.S. auto industry is generally performing as expected, with gradual increases in sales pace at the expense of larger discounts and reduced profitability.” In other words, growth is happening, but it’s not without trade-offs. For consumers, the reality is a market where new-vehicle sales expected to rise 9.6% in March come with a steeper price tag—and potentially more to come.
Trucks and SUVs Dominate
No surprise here: trucks and SUVs continue to rule the road. Accounting for over 81% of retail sales in March, these vehicles remain the go-to choice for American buyers. Their popularity isn’t just a matter of taste—higher incentive spending on these models reflects manufacturers’ efforts to keep them moving amid rising costs. Cars, by contrast, are a smaller slice of the pie, though their incentive increases show the industry isn’t ignoring them entirely.
This split underscores a long-standing shift in the U.S. market, where bigger, more versatile vehicles have steadily overtaken sedans. As new-vehicle sales are expected to rise 9.6% in March, expect trucks and SUVs to lead the charge, reinforcing their dominance in showrooms and on highways.
The Bigger Picture
Zooming out to the first quarter, the numbers tell a story of resilience. Total new-vehicle sales of 3.9 million units and retail sales of 3.2 million units signal a market that’s finding its footing after years of disruption. Yet, the gains are tempered by challenges that refuse to fade. Affordability, tariffs, and the balance between inventory and pricing are all pieces of a puzzle the industry is still solving.
For buyers, the March bump—where new-vehicle sales are expected to rise 9.6%—offers a window to act before tariffs reshape the landscape. For dealers and manufacturers, it’s a moment to navigate rising costs and shifting demand without losing momentum. King sums it up: “Well-established trends point to gradual increases in sales, but the expense is clear.” Profit margins are thinning, and the tariff wildcard looms large.
What’s Next?
As April arrives and tariffs take effect, the industry will face a new test. Will consumers keep buying at this pace, or will higher prices cool demand? Could used vehicle prices, already poised to rise due to tariff spillover, siphon off some of the new vehicle crowd? And how will manufacturers adjust production and pricing to stay competitive?
For now, new-vehicle sales are expected to rise 9.6% in March marking a high note in a market that’s far from predictable. The surge reflects a blend of consumer urgency and industry adaptation, but the road ahead promises twists. Whether this growth holds—or buckles under mounting pressures—will depend on how buyers, sellers, and policymakers navigate the months to come. One thing’s certain: the U.S. auto market isn’t slowing down for anyone.