By Ray Birch
WASHINGTON—Good and bad news for credit union auto lenders: The Trump tariffs won’t greatly affect affordability of cars and trucks in 2025, yet overall sales of new vehicles will drop by more than two million units compared to 2024.
Also, used vehicle values will rise, and remain elevated for some time, Black Book reports.
As CUToday.info has reported, the Trump tariffs are to begin this week, a planned 25% tariff on all assembled vehicles imported into the United States.
A new Black Book report contends automakers are expected to attempt to maintain relative pricing within their showrooms, potentially spreading the increased costs across their entire product lines.
“They will also likely absorb a significant portion of the tariff impact, sacrificing profit margins to avoid long-term sales declines,” Black Book said. “Absorbing as much of the tariff impact as possible.”
The automotive industry requires “massive” investment in vehicle development and fixed operations that take years to amortize over the lifecycle of a vehicle, Back Book explained.
“Keeping production steady is a critical part of the financial calculation driving long term profitability, and Black Book believes automakers will sacrifice ~80% of existing margin on post-tariff production to avoid or minimize long term losses towards amortization of fixed costs,” Black Book said.
Shift In 2025 Market Share By Sector And Segment
Black Book said it expects the market share of domestically produced pickup trucks to increase at the expense of premium passenger cars—which are predominantly imported and higher priced—and mainstream passenger cars, which have a heavy mix of imported vehicles and rental fleet sales.
No Consideration Of Cross-Elasticity Impacts For Non-Affected Vehicles
Laura Wehunt
Black Book noted that it has not considered unique shifts in vehicle market share for non-affected vehicles versus vehicles subjected to the 25% tariff.
“This approach extends to automakers who are more insulated from tariff impact due to heavy domestic production (Ford) compared to automakers who are heavily reliant on import vehicles (Volkswagen Group of America),” Black Book said. “Considering all factors, Black Book expects the average transaction price (ATP) to increase to $52,250, a 5% rise from the 2024 year-end figure of $49,750.”
Black Book said it expects an ATP of $52,250 will result in a 12.9-million unit seasonally adjusted annual rate (SAAR) of sales.
“This forecast aligns with the sales and pricing performance of 2022 at the height of the supply chain crisis,” Black Book said. “However, during that year the significant rise in incomes went into the pockets of dealers and automakers. In a post-tariff environment, the incremental revenues will go to the federal government at the expense of automakers.”
Black Book pointed out that vehicle sales in the U.S. fell sharply during the Great Recession, dropping to 13.2 million in 2008 and 10.4 million in 2009. Production was also curtailed significantly due to the bankruptcies of GM and Fiat Chrysler Automobiles. Sales began to recover but were weak in 2010 (11.6M) and 2011 (12.8M). They steadily increased to over 17 million in 2015 and remained strong for the rest of the decade.
In January 2025, prior to the announcement of tariffs, Black Book said it forecasted 16.4 million sales of new vehicles for the full calendar year.
“If tariffs are deployed April 3 and active through the remainder of the year, Black Book expects sales to fall to 13.7 million new cars and trucks in 2025, a roughly 17% overall annual decrease,” Black Book said.
U.S. new vehicle sales reached approximately 15.9 million in 2024.
Used Market Impact
Black Book added that it expects two key factors to influence used vehicle values.
“In the immediate term, new car price increases will lift used vehicle values similar to what the U.S. market experienced during the supply chain crisis of 2021 and 2022,” Black Book said. “At an industry level, two–six-year-old vehicles could see prices jump $1,250-2,000 on average in the wholesale market by July.”
Reductions in new vehicle sales will cause used vehicle supply to once again drop in 2028 and beyond.
“This would drive vehicle values up even further in the last few years of the decade. In this scenario, long term residual values of 60-65% for three-year-old vehicles could be the norm until the middle of the next decade,” Black Book said.
“Black Book has been reporting a surge in conversion rates and vehicle values over the past few weeks, driven by the anticipated implementation of tariffs,” said Laura Wehunt, vice president, data and analytics at Black Book. “With broader tariffs on all imported vehicles set for April 3, we expect continued and more significant market impacts on wholesale values, with further increases persisting through the summer.”
“We know that tariffs will impact new as well as used vehicle prices but are less certain of how widespread tariffs across automotive as well as other industries may influence macroeconomic fundamentals,” added Swaroopa Pai, director, residual forecasting and analytics at Black Book. “Should tariffs and other administration actions plunge the U.S. into a recession, it could severely impact new vehicle demand, driving further declines to annual sales volume and potentially prove disastrous for certain automakers, suppliers and other industry stakeholders. The current Black Book macroeconomic forecast remains unchanged due to the rollout of auto industry tariffs, but our Economics Committee is watching key auto industry indicators to adjust our outlook accordingly.”