(WWJ) Carmakers end the first half of 2025 on a strong note, with a lot of uncertainty in the air as the second half of the year gets underway.
While sales for the entire auto industry were trending up about three percent, it appears GM and Ford were among the big winners, while Stellantis posted a significant drop in its sales.
GM sales rose 7% in the second quarter and 12% in the first half.
“The investments we have made in our crossovers, SUVs, and pickups – both gas and electric – along with great execution by our employees, suppliers and dealers, have made GM the engine of growth for the U.S. industry this year,” said Duncan Aldred, GM senior VP and president of North America.
Ford sales rose nearly 7% in the first half of the year, after an exceptionally strong second quarter, where sales were up at more than twice that rate.
“We blew the doors off the overall industry with our second-quarter sales,” said Andrew Frick, president, Ford Blue and Model e, and interim head of Ford Pro.
Ford was helped by an employee pricing for all promotion that will end after the holiday weekend. No announcement has been made on what may be coming next.
“There's no question that ‘From America, for America’ went over really well with America,” says Ford analyst Erich Merkel.
But Merkel says Ford was also helped by a number of new products, and a strong demand for vehicles with off road trims. Dealers also had large supplies of all new versions of Ford’s largest utilities, the Ford Expedition and Lincoln Navigator.
“Our Expedition, which is one of our new products, was up about 44%. We had our best second quarter in 20 years. Navigator was up 115% in the second quarter.”
Stellantis sales fell 10 percent in the second quarter. But the company did see sales growth in some areas, with Ram brand sales up 5 percent and Jeep brand sales up 1 percent.
“We continue to see total sales growth for Jeep® and Ram brands, with Ram fueled by sales of the Ram 1500,” said Jeff Kommor, head of U.S. sales. “We plan to build on that success in the second half of the year.
The three Korean brands all had record performances in the first half. The largest, Hyundai, saw its sales up 10%.
“We just wrapped up the strongest first half in Hyundai’s history, driven by sales growth across our lineup,” said Hyundai Motor North America President and CEO Randy Parker.
Kia also had its best first half ever, with sales up 8% over last year. Most of the boost came from SUVs. But the Carnival minivan and the K4 small car also had record performances. Luxury brand Genesis saw its sales up 17%.
When the second quarter began, there were predictions that tariffs could cause production and supply disruptions, and significant increases in sticker prices. While that could still happen, Cox Automotive Chief Economist Jonathan Smoke says it hasn’t happened yet, and the second quarter was strong for both the auto industry and the overall economy.
“What we have seen thus far has not been catastrophic.”
Sales were helped by a rush of consumers to dealerships in late March that continued into April and early May. That has largely ended now, and likely resulted in sales that would have been made in the third quarter, being pulled ahead into the second.
“We expect the sales pace to slow as fewer summer buyers remain after a frenzied spring, and the high prices and tight inventory grows as a headwind in the fall,” says Charlie Chessborough, senior economist at Cox Automotive.
Cox is projecting full year sales in the $15.7 million range, which would be a slight drop from last year. But Chessborough also says there’s room for that number to either fall or rise, depending on events in the second half of the year.
The big issue is the average transaction price of a vehicle, which has been growing as inventories shrink. JD Power says it reached $46,233 in June, up $1,400 or 3.1% from June 2024, but up only $77 or 0.2% from May.
“There’s many hidden ways to raise price,” says Mark Wakefield, who leads the auto practice at Alixpartners. “The easiest and fastest way is to adjust incentives, which we see automakers continue to do.”
Several carmakers have started to announce small sticker price increases, and more are expected. But Cox Automotive says they will be somewhat restrained by competition.
As vehicles get more expensive, more consumers are resorting to longer loans. Edmunds.com estimates that more than 22% of buyers are opting for loans of 82 months, or even longer. Others, with higher incomes are paying more. Roughly one in five car payments now top a thousand dollars a month.
“It’s clear that buyers are pulling the few levers they can control to manage affordability, whether that’s by taking on longer loans, financing more, or putting less money down — even if some of those decisions increase their total costs,” said Ivan Drury, Edmunds’ director of insights.
The concern is that this could cause consumers problems over the long term, says Joseph Yoon, who’s consumer insights analyst at Edmunds.
“While extended loan terms may make a monthly payment more palatable, consumers need to keep in mind the risks associated with a loan extended that far into the future, including increased costs for upkeep down the line and the risk of being underwater on the loan if the car is traded in before it’s paid off.”
Hyundai's Randy Parker says they have not raised prices because of tariffs. He also feels his brands have momentum going into the second half, but says the entire industry faces head winds.
"I think flexibility and affordability is going to be the key to managing the situation in the second half. We are going to stay aggressive and competitive in the market with our programs."