Is the American Automotive Market Back on Track?
After a dynamic start to the year driven by early demand surges and supply chain recalibrations, May 2025 brought a breath of stability to the U.S. automotive industry. According to a fresh report by J.D. Power, retail vehicle sales rose by 1.1% year-over-year, signaling not a boom — but a balanced bounce back.
This growth, while modest on paper, is significant in context. Consumers not only continued buying — they spent more than ever, with average transaction prices setting new records.
Where Is This Momentum Coming From?
In the months leading up to May, the auto sector saw unusual buying patterns. Anticipated tariff changes prompted many to purchase early in Q1, pulling demand forward and temporarily inflating sales. As that rush faded, May offered the first real look at how the market performs under normalized conditions.
Surprisingly, it held strong.
The average new-vehicle transaction price reached $45,462 — up 1.4% from May 2024. And while April’s pricing was slightly higher, May’s record-level consumer spend proves that buyers are still willing to invest in quality, even if volume growth slows.
What’s Driving the Shift in Buyer Behavior?
Beyond pricing and sales volumes, the real story lies in changing preferences. Traditional internal combustion engine (ICE) vehicles still led the market, but their share declined by 4.1 percentage points compared to last year.
In their place, hybrid electric vehicles (HEVs) are stepping up, now accounting for nearly 15% of new retail sales — a 4.3% jump in just one year. Battery electric vehicles (BEVs) also held steady at 8.1%, signaling that America’s transition to alternative fuel sources is gaining momentum, not hype.
“The data shows a customer base evolving — not abandoning cars, but choosing smarter, greener options,” says an analyst at J.D. Power.
What About Dealer Profits and Inventory?
Retailers also had reason to smile. Dealer profits per vehicle reached $2,502, up $98 from last May, with finance and insurance products contributing significantly. Total profits for the month? Over $3 billion — a 9.8% increase year-over-year.
Even inventory, once a post-pandemic nightmare, is normalizing. As of May, inventory stood at 2.13 million units, 23% higher than last year, with a healthy 57 days of supply on hand.
A Glimpse at the Road Ahead
While 1.1% may not sound like a thunderous rebound, it’s the right kind of growth — steady, sustainable, and paired with healthy consumer interest and evolving product choices.
In many ways, May 2025 marks the new normal for the U.S. auto sector: a market not ruled by scarcity or panic buying, but choice, balance, and long-term transition toward smarter mobility.
Source: Data from J.D. Power – GlobalData Automotive Forecast, May 2025