Cox Automotive forecast: September new-vehicle sales up 6% year over year; record electric sales help charge strong third quarter

The new-vehicle market exhibited unexpected resilience in Q3, with the September SAAR projected at 16.2 million, leading Cox Automotive to raise its full-year forecast to 16.1 million. This strength was significantly bolstered by a record surge in Q3 electric vehicle sales, reaching 410,000 units or nearly 10% of total sales, as consumers capitalized on expiring federal tax credits. However, a notable slowdown in EV sales is anticipated in Q4 post-incentive expiration, alongside broader market headwinds from tariffs and rising import costs, though long-term EV growth is still expected, with the 'Big Four' automakers disproportionately driving current year-over-year gains.

Analysis

The U.S. new-vehicle market demonstrated unexpected resilience through the third quarter, with the seasonally adjusted selling rate (SAAR) for September projected to reach 16.2 million. This performance prompted Cox Automotive to revise its full-year 2025 sales forecast upward to 16.1 million units from a previous 15.7 million. A primary driver of this strength was a record-breaking surge in electric vehicle (EV) sales, which are forecasted to hit 410,000 units in Q3—a 21.1% year-over-year increase and representing a record 10% of total market share. This spike is directly attributable to consumers capitalizing on the $7,500 federal tax credit before its expiration at the end of September. However, the market's growth is highly concentrated, with the 'Big Four' automakers (General Motors, Toyota, Ford, and Hyundai) projected to post a combined 11.2% year-over-year sales gain in Q3, while the rest of the industry remains nearly flat at 0.1%. Looking ahead, significant headwinds are anticipated, including a sharp deceleration in EV sales in Q4 following the incentive's end and potential price hikes as automakers pass on costs from tariffs, which will test the market's underlying strength.

Key Decisions for Investors

• Investors should be cautious about extrapolating the market's Q3 strength, as it was heavily influenced by a temporary EV tax credit, and a significant slowdown is expected in Q4.
• Consider overweighting positions in the 'Big Four' automakers (GM, F, TM) which are capturing nearly all of the market's year-over-year growth, in contrast to smaller competitors who are showing sales declines.
• Closely monitor Q4 EV sales data to assess the organic consumer demand for electric vehicles post-incentive, as this will be a critical indicator for the sector's medium-term trajectory.
• Watch for signs of weakening consumer demand in response to anticipated vehicle price increases resulting from new tariffs, which could dampen the positive market sentiment observed in Q3.