Equilibrium in Car Market as Inventory Expands, Offering a Variety of New and Pre-owned Models at Competitive Prices
The automotive industry is experiencing a dynamic landscape, according to the latest August 2025 Industry Insights Report by Cars Commerce. The report, crafted by Cars Commerce's expert data analysts, reveals a nuanced landscape that balances growth opportunities with economic challenges.
The report highlights several key trends in the automotive industry for 2025, including ongoing volume gains in U.S. auto sales, supportive electric vehicle (EV) sales ahead of federal incentive expirations, increasing incentive spending by automakers, tightening vehicle supply, and shifts in consumer financing dynamics.
One of the most notable trends is the growth in EV sales, driven in part by the impending September 30 deadline for federal EV incentives. This creates buying urgency and elevates EV market share within overall sales. Ford, Chevrolet, and Honda are well-positioned and leading with the right inventory mix to meet this demand.
To maintain sales pace amid economic headwinds, manufacturers are raising incentive spending. In July 2025, incentive programs like employee pricing and 0%-interest offers have significantly boosted sales for some brands, such as Ford. Loan rates for new and used vehicles have declined from their 25-year highs, but attractive financing offers remain limited to well-qualified buyers.
The used vehicle market is also experiencing changes. Used car prices are experiencing accelerated depreciation, with national average price drops exceeding typical seasonal rates. This is due to supply outpacing demand in some segments, contributing to a rapid market shift that buyers and sellers must navigate carefully. However, vehicles priced under $20,000 have increased 19% year over year, indicating a more affordable segment of the market.
Trade-in values have softened, and dealers are holding inventory longer as consumers wait for better pricing. Rebecca Lindland, senior director of industry data and insights at Cars Commerce, stated that the automotive market is returning to normalcy.
The report also analyses supply, demand, pricing, and consumer behavior data from Cars.com, Dealer Inspire, and Accu-Trade. Notably, used-vehicle inventory is down 13% compared to five years ago. Rivian has experienced a 19% decline in trade-in values among luxury EV brands, and Tesla has seen a 22% decline.
Two of the top four highest declines in trade-in values among luxury EV brands are accounted for by Tesla and Rivian. On the other hand, Chevrolet experienced a 47% year-over-year growth, boosted by the rollouts of the new-to-market Blazer EV and Equinox EV.
The used-car market, excluding EVs, is experiencing less year-over-year volatility with supply and demand. Used EVs continue to experience pricing volatility. Used car prices have fallen 5% year over year, but have remained relatively flat since April.
The report also emphasizes the increasing demand for Vehicle Service Contracts (VSC) and GAP due to consumer concerns over economic uncertainty, rising repair costs, and longer financing terms leading to negative equity risks.
The Cars Commerce Industry Insights Report is available for download at www.carscommerce.inc. The report underscores a dynamic industry balancing between growth opportunities and economic challenges in the near term.
- In an effort to maintain sales pace amid economic headwinds, manufacturers are investing more in car-maintenance services, such as offering Vehicle Service Contracts (VSC) and GAP, to address consumer concerns over economic uncertainty, rising repair costs, and longer financing terms leading to negative equity risks.
- As the used car market continues to evolve, vehicles priced under $20,000 have increased 19% year over year, indicating a more affordable segment of the market. Meanwhile, high-end electric vehicles like Tesla and Rivian are experiencing significant declines in trade-in values, contrasting with the strong growth of brands like Chevrolet, supported by new electric vehicle models like the Blazer EV and Equinox EV.
