Cox Automotive Forecast: Despite Q4 Slowdown, New-Vehicle Sales Forecast to Reach 16.3 Million in 2025, up Nearly 2% from 2024; Best Result Since 2019

Cox Automotive projects December 2025 SAAR near 15.9 million (down from 16.8m a year ago but up from November’s 15.6m), with December volume down 3.5% year‑over‑year but up 12.7% month‑over‑month. Kelley Blue Book estimates full‑year 2025 new‑vehicle sales at 16.3 million (+1.8% YoY), the strongest year since 2019; GM is forecast to lead the market with 17.3% share while Toyota’s sales rise ~8.4% to a 15.5% share. Cox notes Q4 weakness driven by tariffs, higher prices and the expiration of EV tax credits (which earlier boosted EV demand), and forecasts 2026 SAAR to slip ~2.4% to 15.8 million.

Analysis

Market structure: 2025 showed share consolidation toward scale players (GM, TM, Hyundai) as tariffs and vanishing EV credits compressed margins for smaller brands. Expect pricing power for top OEMs to persist into 2026 even as Cox forecasts SAAR down to ~15.8m; that implies softer demand but concentrated profit pools. Commodities (copper, lithium) face downside pressure from the EV tax-credit cliff while ABS/auto credit spreads are vulnerable to a 20–75bps widening if sales cool materially.

Risk assessment: Tail risks include a rollback/renewal of EV incentives (positive shock), tariff escalation disrupting built inventory (negative shock), or a macro recession driving SAAR <15.0m (severe downside). Immediate (days) risks center on policy headlines; short-term (weeks–months) on Dec/Jan sales prints and OEM guidance; long-term (quarters) on fleet replacement cycles and subsidy policy. Hidden dependencies: dealer-level incentives, fleet vs retail mix, and timing of tariffed shipments.

Trade implications: Favor scale and cash-generative OEMs while hedging cyclic exposure. Relative-value: long TM/GM vs short F reflects share trends and Ford’s weaker sentiment; reduce commodities/miners exposure tied to EV demand. Credit angle: buy protection on auto ABS if spreads widen >40bps. Use options to cap downside: 3-month put spreads on F (15–20% OTM) financed by selling near-term calls on GM.

Contrarian angles: Consensus underprices used-car/resale resilience and the chance of policy U-turns—both would re-rate battery metals and suppliers. Market may over-penalize Ford; a sequential SAAR stabilization (>15.8m for two months) would trigger a reversal. Watch January sales and any White House tariff/credit signals as binary re-risk events.

Key Decisions for Investors

• Establish a 2–3% long position in TM (Toyota, NYSE: TM) over 6–12 months to capture share gains and defensive mix; add 6-month ATM calls (or 50% delta) if monthly SAAR stays >=16.0m for two consecutive months.
• Create a pair trade: long 2% GM (NYSE: GM) vs short 1–1.5% F (NYSE: F) for 3–6 months to express scale advantage; hedge by buying a 3-month put spread on F (15–20% OTM strikes) sized to the short.
• Trim direct exposure to copper/lithium/minerals by 10–20% within 30 days; redeploy cash to high-quality OEMs or buy short-dated puts on battery-miner ETFs if policy signals point to further EV-tax expiration.
• Buy protection on auto ABS (CDS or TRS proxies) if auto securitization spreads widen >40bps versus current; that hedge should be sized to cover 2–4% portfolio exposure to consumer credit.
• Monitor two binary catalysts in the next 30–60 days—(1) White House announcements on tariffs/EV incentives and (2) Jan monthly SAAR. If either reverses (new credits or SAAR >16.2m), reduce shorts and rotate 50% of commodity hedges into battery-metal miners.