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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

1. Q1 vehicle sales increased 4.8% year-over-year, strong demand persists. 2. Affordability concerns rise as sub-$30K vehicles make up only 14% of inventory. 3. New tariffs could increase prices, particularly affecting entry-level vehicle availability. 4. Financing conditions worsen, with auto-loan APRs rising amid tighter credit terms. 5. Strong March sales highlight consumer urgency, but pricing pressures are expected.

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$11.1504/17 07:35 AM EDTEvent Start
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FAQ

Why Bearish?

Potential tariff-driven price increases could negatively affect consumer access to vehicles, reminiscent of impacts during the 2018 tariffs that led to higher vehicle prices and reduced sales in lower segments.

How important is it?

The article details significant automotive market trends impacting affordability, directly relevant to CARS, especially given its business model centered on vehicle sales and consumer access.

Why Short Term?

Market responses to tariffs and interest rate adjustments likely to materialize in vehicle pricing and sales trends in the next few quarters, as seen historically in similar scenarios.

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Despite soft start, March auto sales soar to sixth-highest in 50 years1 as looming tariffs fuel early demand, /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.  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. 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 UrgencyDespite 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 ChallengingWhile 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 dataABOUT CARS COMMERCECars 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.SOURCE Cars Commerce WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM? 440k+ Newsrooms & Influencers 9k+ Digital Media Outlets 270k+ Journalists Opted In

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