Strong Automotive Sales in First Quarter Mask Growing Affordability Concerns as Tariffs Threaten Entry-Priced Inventory, According to Cars Commerce's Industry Insights Q1 Report

Rhea-AI Summary

Cars Commerce (NYSE: CARS) has released its Industry Insights Q1 2025 Report, revealing significant shifts in the automotive market. New-vehicle sales increased 4.8% year over year in Q1, with March recording the sixth-highest sales in 50 years. However, affordability concerns are growing as vehicles under $30,000 now represent only 14% of new-vehicle inventory, down from 38% during 2019-21.

Key findings include:

• New-car supply is up 9% year over year
• Average vehicle time on dealer lots is 78 days
• Average new-car prices remain steady at $49,000, 30% higher than Q1 2019
• Nearly 90% of sub-$30K vehicles are assembled outside the US
• Auto-loan APRs increased 19 basis points year over year despite Federal Reserve rate cuts

The report highlights concerns about potential price increases due to upcoming tariffs, particularly affecting entry-level vehicles. Only three sub-$30K models - Honda Civic, Toyota Corolla, and Chevrolet Malibu (to be discontinued in 2026) - are built domestically.

News Market Reaction

+1.26%

1 alert

+1.26% News Effect

On the day this news was published, CARS gained 1.26%, reflecting a mild positive market reaction.

Data tracked by StockTitan Argus on the day of publication.

Despite soft start, March auto sales soar to sixth-highest in 50 years¹ as looming tariffs fuel early demand

CHICAGO, April 17, 2025 /PRNewswire/ -- Cars.com Inc. (NYSE: CARS) (d/b/a "Cars Commerce Inc."), an audience-driven technology company empowering the automotive industry, reveals notable changes to the automotive industry in its Industry Insights Q1 Report. This comprehensive report, crafted by Cars Commerce's expert data analysts, delves into macro and micro automotive market insights by analyzing supply, demand, pricing and consumer behavior data from across the company's platform, including Cars.com^®, Dealer Inspire and AccuTrade. 

The auto industry had a strong start to 2025, with first-quarter new-vehicle sales up 4.8% year over year.¹ Despite the healthy pace, the market is grappling with growing affordability concerns. Cars priced under $30,000 now account for just 14% of new-vehicle inventory, down from 38% during the 2019-21 period, marking an erosion in access to budget-friendly models.

"For many Americans, a car isn't a luxury — it's an essential part of daily life. The entry-priced vehicle category still hasn't recovered from the chip shortages caused by the pandemic, and these new tariffs could stall further progress. If these vehicles become out of reach for everyday buyers, it could have meaningful implications across the industry and the broader economy," says David Greene, an industry analyst at Cars Commerce. "The vast majority — nearly 90% — of sub-$30K vehicles are assembled outside the United States, exposing them to potential price hikes or production cuts as trade policies shift. Only three models in this price bracket — the Honda Civic, Toyota Corolla and Chevrolet Malibu — are built domestically, and the Malibu is set to be discontinued in 2026."

Strong Q1 Sales Underscore Urgency

Despite these headwinds, the first quarter of 2025 saw strong new-vehicle demand. March sales were particularly robust, the sixth-highest March in nearly 50 years — largely driven by pre-tariff buying activity, seasonal tax refunds and automaker incentive spending¹.

Inventory levels have rebounded from the chip shortage, with new-car supply up 9% year over year and vehicles spending an average of 78 days on dealer lots — a figure that closely aligns with pre-pandemic norms. Prices, however, remain elevated. While the average new-car price has held steady at approximately $49,000 for the past 18 months, it is still 30% higher than in the first quarter of 2019. With tariffs now entering the equation, this pricing plateau is expected to break, likely driving prices higher in the coming months.

Financing Conditions Remain Challenging

While the Federal Reserve cut interest rates by 100 basis points between September 2024 and December 2024, auto-loan APRs climbed 19 basis points year over year in the first quarter as lenders tightened credit terms amid market uncertainty. This disconnect between federal policy and consumer lending adds to the affordability strain facing many buyers.

"Even with more vehicles on lots, the path to ownership is becoming more difficult — especially for first-time buyers and those with tighter budgets," says Greene.

To download the full report, visit www.CarsCommerce.inc.

¹ US. Bureau of Economic Analysis

*Cars Commerce internal data

ABOUT CARS COMMERCE

Cars Commerce is an audience-driven technology company empowering the automotive industry. The Company simplifies everything about car buying and selling with powerful products, solutions and AI-driven technologies that span pretail, retail and post-sale activities – enabling more efficient and profitable retail operations. The Cars Commerce platform is organized around four industry-leading brands: the flagship automotive marketplace and dealer reputation site Cars.com^®, award-winning technology and digital retail technology and marketing services from Dealer Inspire, essential trade-in and appraisal technology from AccuTrade, and exclusive in-market media solutions from the Cars Commerce Media Network. Learn more at www.carscommerce.inc.

View original content to download multimedia:https://www.prnewswire.com/news-releases/strong-automotive-sales-in-first-quarter-mask-growing-affordability-concerns-as-tariffs-threaten-entry-priced-inventory-according-to-cars-commerces-industry-insights-q1-report-302431081.html

SOURCE Cars Commerce

FAQ

What is the current average price of new cars according to Cars Commerce (CARS) Q1 2025 report?

According to the Q1 2025 report, the average new-car price has remained steady at approximately $49,000 for the past 18 months, which is 30% higher than Q1 2019 levels.

How much have new vehicle sales increased in Q1 2025 for Cars Commerce (CARS)?

New-vehicle sales increased by 4.8% year over year in the first quarter of 2025.

What percentage of new vehicles are priced under $30,000 in 2025?

Only 14% of new-vehicle inventory is priced under $30,000, down significantly from 38% during the 2019-21 period.

Which affordable car models are still manufactured in the United States according to Cars Commerce?

Only three sub-$30K models are built domestically: Honda Civic, Toyota Corolla, and Chevrolet Malibu (which will be discontinued in 2026).

How long are new vehicles staying on dealer lots according to Cars Commerce's Q1 2025 report?

Vehicles are spending an average of 78 days on dealer lots, which aligns with pre-pandemic levels.