U.S. Vehicle Sales (May 2025)

U.S. Vehicle Sales Cooled in May as Tariff Frontrunning Ended

• U.S. vehicle sales decreased 9.3% month-on-month (m/m) to 15.7 million (annualized) units in May – coming in below consensus expectations for 16.0 million.
• Unadjusted sales volumes were 1.47 million units or 2.5% above year-ago levels. The average daily selling rate (DSR) was 54,318 – calculated over 27 days – 1.3% below May 2024's 55,042 daily rate calculated over 26 days.
• Passenger vehicle sales fell 8.5% year-on-year (y/y) while sales of light-trucks increased by 5.1% y/y. Light-trucks accounted for 83% of last month's sales, higher than its year-ago 81% share.   

Key Implications

• Tariffs on automobiles that were implemented on April 3rd have resulted in distortions to the monthly sales pattern. Buyers rushed to purchase vehicles in March and April to get ahead of tariffs, reducing inventories on dealer lots and sapping sales in May. Coming into the month, supply levels were down 4.1% year-on-year, marking the first year-on-year decline in nearly three years.
• Looking ahead, it is likely that price impacts from the tariffs on automobiles and automobile parts will begin to show up more materially as automakers look to pass on at least a portion of their higher costs on to consumers. Uncertainty related to broader price pressures from reciprocal tariff policies are also expected to keep the Federal Reserve on hold for some time, which will keep financing costs elevated and weigh on the broader economy. Cumulatively, this is expected to weigh on sales volumes through the second half of the year.       

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