Global New Car Market to Grow 2.4% in 2025; US Faces Tariff Uncertainty, China’s Smart Car Competition Intensifies, Says TrendForce

TrendForce’s latest investigations reveal that global sales of new cars are expected to reach 90.6 million units in 2025, marking a 2.4% YoY increase. China will account for the largest share at 29%, followed by the US at 18% and Western Europe at 15%. However, the US market faces significant uncertainty due to tariffs, while competition in China’s smart vehicle sector is expected to heat up.

On February 18th, US President Donald Trump announced plans to impose a 25% tariff on all imported vehicles. This follows his earlier proposal to apply a 25% tariff on goods from Mexico and Canada, which was delayed by 30 days on February 3rd. 
Furthermore, an additional 10% tariff on Chinese imports took effect on February 4th, and a 25% tariff on steel and aluminum is set to be implemented on March 12th. These factors introduce potential volatility to new US car sales in 2025. 

TrendForce highlights that the automotive supply chain between the US, Canada, and Mexico is deeply interconnected. Given geographical advantage, production costs, and the United States-Mexico-Canada Agreement(USMCA), over ten global automakers have established factories in Mexico, with more than 30 various assembly plants and hundreds of component suppliers operating in the region.

While automakers may attempt to shift production to mitigate the impact of US tariffs, relocating entirely from Mexico is challenging. Additionally, tariffs on auto parts and supply chain adjustments will further raise costs, likely leading manufacturers to pass these costs onto consumers through higher vehicle prices.

TrendForce analysis suggests that if the US imposes a 25% tariff on Mexican and Canadian imports, rising vehicle prices could push consumers to delay purchases or turn to leasing and the used car market. Consequently, US auto sales growth in 2025 may shift from a projected 1% increase to a 3% decline.

However, tariffs are not the sole factor affecting new car sales- final tariff conditions, implementation timelines, interest rate cuts, inflation trends, and automakers’ strategies will all influence market performance.

Meanwhile, China, the world’s largest auto market, is expected to see steady growth in 2025, driven by government policies such as extended subsidies for vehicle replacement programs with expanded eligibility criteria. TrendForce forecasts that NEVs will account for 50% of China’s new car sales in 2025.
With a high sales baseline, automakers will not only compete on price but also on smart features to attract customers as competition intensifies. Leading automaker BYD is pushing for “smart driving for all,” integrating advanced driver-assistance features into affordable models. This move is expected to accelerate the widespread adoption of smart driving technologies in China while further intensifying competition within the local smart vehicle supply chain.

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