- Analysts predict 87.9 million new vehicles will be produced globally this year.
- This represents a 2% drop, equating to around 1.55 million fewer vehicles.
- Several automakers are shifting more production to the USA amid rising tariffs.
President Donald Trump’s tariffs aren’t just driving up the prices of everyday consumer goods and cars, they’re also expected to cause a decline in total car production this year. North America, in particular, could feel the squeeze, with U.S. sales volumes also expected to dip.
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Analysts from S&P Global Mobility believe we could end 2025 with 87.9 million new vehicles built, a 2% decline from the previous year, or the equivalent of 1.55 million vehicles. This could be the second straight year of production declines after manufacturing fell last year due to plant stoppages among several brands in Japan.
Read: VW Group Negotiates With Trump Administration Over Tariffs
The US will feel the pinch from the tariffs. As noted by Nikkei Asia, almost 50% of all new cars sold locally are produced internationally. Additionally, between 30% and 60% of auto parts are imported, too. With this in mind, it’s possible that North American car production could decline by 9% throughout 2025 while US sales volumes may drop by 3%.
The impacts of the tariffs could last for a long time. Several automakers, including Audi and Jaguar Land Rover, have halted exports to the United States and will work through their existing inventories, hoping that Trump may further ease tariffs on the auto industry in the coming months.
Some car manufacturers are doing what the President hoped they would: shifting some production to the United States. Last week, Volvo acknowledged that it will start producing a second model locally, likely either the XC60 or XC90 in both mild-hybrid and plug-in hybrid guises. Honda is also moving production of the Civic Hybrid to local shores, and Mercedes-Benz says it will increase capacity in the US. However, this will take “some years.”
Meanwhile, last month, VW Group CEO Oliver Blume revealed that Audi has been in talks with the Trump administration about setting up a factory in the U.S. While VW already has plants in the U.S., all Audi models sold locally are still imported. Moves like this may be seen as a win, but U.S.-built vehicles could end up costing more than their overseas counterparts, primarily due to higher labor costs.
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Lead image White House Youtube/Cupra/Carscoops
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