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The global automotive industry is facing a series of challenges in 2025, with the U.S. tariffs on imported vehicles and parts causing significant ripples.
Heycar, an online marketplace for used cars, will be wrapping up its operations before the end of the summer, following Daimler's decision to sell its shares in the platform in 2023. Volkswagen Financial Services (VWFS) will absorb the platform's technology and expertise into a newly formed subsidiary, as VWFS winds down the Heycar marketplace division.
Across Europe, used-car residual values (RVs) continued to decline in April, with Austria, France, Germany, Italy, Spain, Switzerland, and the UK all recording a drop. Three-year-old vehicles at 60,000km held on to a smaller percentage of their list price compared with March, and values also dropped year-on-year, with Italy seeing the steepest fall, down 4.6 percentage points (pp) compared to April 2024.
In the U.S., rising vehicle prices are expected to climb by 5% this year, further weakening demand. The 25% U.S. tariff on imported vehicles and parts has significantly increased vehicle prices, raising the average cost of imported vehicles by about $6,250 per vehicle. This price hike has made many buyers more cautious, with over 42% of potential buyers less likely to purchase due to higher costs, impacting demand negatively.
The outlook for Northern America has dropped to 17.67 million units, due to fears of reduced EV incentives. However, North America's 2025 light vehicle production forecast was increased by 241,000 units, showing some resilience amid volatile tariff policies. Despite this, projections for 2026 and 2027 have been lowered, reflecting ongoing tariff impacts and market stabilization.
The tariffs are also contributing to automakers raising vehicle prices and halting or adjusting supply chains temporarily. Combined with policy changes affecting electric vehicle incentives, these tariffs are expected to reduce U.S. EV sales projections sharply and could harm the U.S. auto industry's global competitiveness, shifting reliance toward traditional internal combustion engines and foreign EV tech.
Global forecasts for the automotive industry have dimmed, with EV Volumes cutting its 2025 light-vehicle sales growth projection to 1.2%. Europe is expected to see growth of just 0.15% in 2025, while China's volumes are forecast to rise by 2.7% in 2025.
In a positive note, major manufacturers, including Ford, GM, and Stellantis, have welcomed the president's move to ease the impact of the 25% US tariff on imported vehicles and parts. The Autovista24 podcast can be subscribed to and listened to on Spotify, Apple, and Amazon Music for more insights into these developments.
In the plug-in hybrid market, Europe saw mixed results, with the UK remaining relatively stable, while plug-in hybrids in particular struggled.
As the industry navigates these challenges, it remains to be seen how the market will adapt and recover in the coming years.
In light of the U.S. tariffs on imported vehicles and parts causing significant disruptions, the financial stability of the automotive industry is under strain, potentially affecting business strategies and investments. Volkswagen Financial Services (VWFS), for instance, is diversifying its operations by absorbing the technology and expertise from the defunct Heycar marketplace, a move that could impact the finance side of their business.
