U.S. Vehicle Sales (February 2025)

U.S. Vehicle Sales Strengthened in February

• U.S. vehicle sales rose 3.2% month-on-month (m/m) to 16.0 million (annualized) units in February – slightly below consensus expectations for 16.1 million units.
• Unadjusted sales volumes were 1.22 million units or 0.7% below year-ago levels, however last year was a leap year resulting in one additional selling day. The average daily selling rate (DSR) was 50,827 – calculated over 24 days – 3.4% above February 2024's 49,160 daily rate calculated over 25 days.
• Passenger vehicle sales fell 4.4% year-on-year (y/y) while sales of light-trucks increased by 0.1% y/y. Light-trucks accounted for 82% of last month's sales, marginally higher than its year-ago 81% share.   

Key Implications

• Light vehicle sales picked up in February as the effects of January's severe weather and typical seasonal trends diminished. February's reading reflects a relatively healthy picture of the market, but affordability challenges remain as auto financing rates ticked up in the new year. Financing rates are likely to reverse in the months ahead as rates adjust to the recent decline in U.S. Treasury yields, but the implementation of 25% tariffs on Canada and Mexico ushers in a new gale-force headwind for the sector.
• The USMCA agreement, previously NAFTA, has been the bedrock of the North American automotive industry for nearly three decades. That agreement has been upended by the U.S. tariffs implemented today, and the risks that this will pose to the U.S. automotive industry cannot be understated (see here). Given the degree of supply chain integration between the three countries, higher prices are likely to filter through to consumers on the roughly 80% of U.S. vehicle sales sourced in North America. The actual impact on the market will be a function of the tariffs' duration, but lower sales and material supply chain disruptions are expected moving forward.       

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