New Tariffs Will Depress 2025 Auto Sales but Boost the Aftermarket
The new car and light truck market has been stuck in low gear since the 2020 onslaught of COVID-19. Annual U.S. light vehicle sales averaged fewer than 15 million from 2020 to 2022, with only moderate gains through 2024.
Over these five years, new car and light truck sales totaled over 10 million fewer compared to 2015 through 2019, when volume averaged 17.2 million per year.
A few months ago, analysts predicted that 2025 would be a comeback year, with the new vehicle market topping 16.5 million for the first time since 2019. However, the recently announced tariffs on vehicle imports and many parts used in vehicles assembled in the U.S. have vaporized this optimism. The U.S. new vehicle market could fall to 15.2 million (or lower), failing to match 2016 levels. Under-powered new vehicle sales will impact the aftermarket in at least five ways, providing a strong tailwind for aftermarket sales (which face their own tariff challenges) through 2030, especially internal combustion engine (ICE) vehicle products.
New Vehicle Market Sputters
New car and light truck sales were hit hard by COVID-19, averaging 14.8 million autos during 2020 and 2021. The new vehicle market declined further in 2022, with fewer than 14 million in sales.
New vehicle sales averaged nearly 15.7 million during the last two years, compared to the 17.2 million annual average sales from 2015 through 2019. Over 10 million fewer vehicles were sold from 2020 through 2024 than during the five years before the onslaught of COVID-19.
Tariffs Hammer Vehicle Sales but Boost the Aftermarket
Tariff-driven higher new vehicle prices (on imports and autos assembled in the U.S. using import parts) will push down the new vehicle market to about a million units (or more) below what many analysts predicted a few months ago. This would lower the 2025 auto volume by about two million units below the average new vehicle market levels from 2015 through 2019.
Lower new vehicle sales will lead to various significant changes that will provide a strong tailwind for the 2025 aftermarket and for years to come. Here are five of the leading changes caused by tariffs that will boost aftermarket volume: higher used vehicle prices, vehicle average age growth, more miles on older vehicles, an upward extension of the age boundary of the repair-age sweet-spot and a slowdown in the expansion of the electric vehicle population on U.S. roads.
These changes, prompted by tariffs, will help boost aftermarket product volume through 2030.
Used Vehicle Prices
Low new vehicle sales (caused by tariff-driven price hikes) will increase the cost of used cars and light trucks. As buyers abandon the expensive new market and shift to more affordable pre-owned options, increased demand for a limited supply of used vehicles will pump up their value.
With the high-priced used market, consumers will be more likely to repair their older cars and light trucks to keep them in good operating condition. This forecasts aftermarket product sales growth, especially for ICE vehicles, which comprise virtually all vehicles over five years old.
Soaring Vehicle Average Age
The struggling new vehicle market will elevate the average age of vehicles in operation (VIO). With fewer new cars and light trucks on the road, older vehicles will be kept in operation longer, and their numbers will expand.
The growing average age of vehicles, along with a higher number of older models on the road, will help to increase aftermarket sales because aging cars and light trucks require more maintenance and replacement parts than newer ones.
More Miles on Older Vehicles
As consumers keep their vehicles rather than replace them with newer ones, older vehicles accumulate more miles.
Older vehicles use more aftermarket products per mile, and rolling their odometers higher will boost aftermarket product use, especially among ICE cars and light trucks.
Older Aftermarket Sweet-Spot
Struggling new vehicle sales between 2020 and 2025 will drive down the number of cars and light trucks in the repair-age sweet-spot (age categories six to 10 years old with the highest rates of product replacement) from 2026 through 2030 compared to today’s VIO.
However, this does not mean that fewer repair parts will be sold. Instead, older vehicles will account for a larger number of miles driven, and the upper age boundary of the sweet-spot will be increased by a year or more.
Since older vehicles use more aftermarket products per mile than newer cars and light trucks, this will boost aftermarket product volume.
Slower EV Population Growth
Lower new vehicle volume will translate into fewer electric vehicles sold. This will slow the EV population growth.
With EVs stuck holding a small share of the nation’s VIO, ICE vehicles will retain their population dominance longer. This will bolster aftermarket volume since ICE cars and light trucks use more aftermarket products than EVs.
Want more? Check out the June 2025 issue of AASP-MN News!