Solid, Boosted by EV Sales

by Calculated Risk on 8/24/2025 08:21:00 AM

From J.D. Power: August New-Vehicle Sales Climb 8.2% as Consumer Spending Reaches Record $54.6 Billion; EV Share Hits All-Time High Brief excerpt:

The seasonally adjusted annualized rate (SAAR) for total new-vehicle sales is expected to be 16.1 million units, up 1.0 million units from August 2024.
…
“August new-vehicle sales are expected to climb 8.2% from a year ago, including a 7.8% increase in retail volume. A strong result, although the results should be viewed in the context of several unusual factors that are distorting typical monthly sales trends.

“First, federal credits of up to $7,500 on EVs will expire on Sept. 30, prompting many EV shoppers to accelerate purchases that otherwise would have occurred later this year. As a result, EV retail share in August is expected to reach an all-time high of 12.0%, compared with 9.5% a year ago.

“Second, Labor Day lands in the August sales reporting period this year. The Labor Day weekend is typically one of the highest sales volume weekends of the year, powered by elevated manufacturer promotional activity and elevated discounts. This year, manufacturers have kept incentives restrained due to tariffs. Normally, incentives as a percentage of MSRP increase by about half a point from January through late summer, but this year they’ve slipped to 6.2% in August from 6.3% in January, underscoring the effect of tariff-related cost pressures.

“Third, lease returns remain at historically low levels following the reduced leasing activity during the 2022 supply shortages. With fewer lease customers cycling back into the market, new-vehicle sales are facing added pressure compared with typical seasonal patterns.

“Finally, from a total sales perspective, fleet deliveries are expected to reach 199,854 units in August, up 11.2% primarily due to the low baseline recorded in August 2024. Fleet volume is forecast to represent 13.5% of total light-vehicle sales, an increase of 0.4 percentage points year over year.

“In sum, August’s retail sales results point to solid new vehicle demand. The results are unquestionably inflated by shoppers accelerating their electric vehicle purchases to take advantage of Federal EV credits—but the sales pace for non-EVs remains robust, especially given the modest discounts available on those vehicles.

emphasis added

Click on graph for larger image.

This graph shows actual sales from the BEA (Blue), and J.D. Power’s forecast for August (Red).

On a seasonally adjusted annual rate basis, the J.D. Power forecast of 16.1 million SAAR would be down 1.9% from last month, and up 6.4% from a year ago.