September sales may show modest rise but affordability clouds outlook

Core Insights - September new vehicle sales are projected to increase slightly from last year, driven by affordability pressures and a surge in electric vehicle (EV) sales due to expiring tax credits [1][2][3] Sales Performance - Consumers are expected to spend $45 billion on new vehicles in September, reflecting an 8.5% increase from September 2024, primarily due to higher prices rather than an increase in sales volume [2] - Total new vehicle sales are anticipated to rise by only 0.1% year-over-year after adjusting for the number of selling days [2] Electric Vehicle Market - EVs are projected to account for a record 12.2% of new vehicle purchases in September, marking a year-over-year increase of 2.6 percentage points [4] - Traditional gas-powered vehicle sales are expected to decline by 2.5% compared to September 2024 [4] Affordability Concerns - Vehicle affordability remains a significant issue, with rising vehicle prices, low discount and incentive packages, and record-high monthly payments [5][6] - The average new vehicle transaction price is forecasted to reach $45,795, a $1,310 or 2.9% increase from last year, while the average monthly payment is projected at $756, the highest recorded for September [6] Manufacturer Profitability - High prices and limited discounts are helping manufacturers maintain profitability despite tariff-related cost pressures, but this comes at the cost of lower sales volumes [7] - Despite the increase in EV sales, underlying demand for EVs remains weak, with over 163,000 EVs expected to remain on dealer lots after the expiration of the federal EV tax credit [7][8]