Report: California’s New Vehicle Market Outlook Clouded by Tariffs

New vehicle registrations in California rose 8.3% in the first quarter of 2025 compared with the same period a year earlier, putting the state above a nationwide 4.6% increase in a buying surge that may have been driven by consumers getting ahead of the potential impact of tariffs, according to the California New Car Dealers Association.

The group’s California Auto Outlook report, which includes data sourced from Experian Automotive , shows total of 463,114 new vehicles were registered in the state.

The report paints a cloudy picture of new vehicle registrations in California because of the potential impact of tariffs.

“Pent-up-demand, combined with improvements in affordability were expected to propel the market in 2025,” the report states. “However, the potential overhaul of U.S. trade policy has added significant unknowns into the new vehicle sales outlook. Initial reports indicate a surge in new vehicle purchases in the months of March and April in anticipation of the implementation of these tariffs, however it remains to be seen if they will result in higher vehicle prices.”

The current forecast is for state new vehicle registrations to fall to 1.71 million units for all of 2025, a 2.3% decline from 2024. Analysts point to trade policy uncertainty and potential tariffs that could raise vehicle prices.

The report also indicates Elon Musk’s political activities may be having an impact on Tesla sales, particularly in California.

Registrations for all zero-emissions vehicles (not including Teslas) rose by 35%, Tesla’s registrations dropped 15.%1 year-over-year, with the company’s share of California’s electric vehicle market falling to 43.9%, down from 55.5% in early 2024.

Hybrid vehicle registrations gained significant traction, accounting for 17.9% of new vehicle registrations—up from 14.8% in 2024. When combined with plug-in hybrids and battery electric vehicles, electrified powertrains represented 42.4% of the market in the first quarter, the report shows.

Toyota maintained its top spot among all brands with 76,625 registrations and a 16.5% market share. Honda followed with 10.8% of market share, while Tesla fell to third place with 9.1%. Brands posting the largest year-over-year growth included Buick (up 99.3%), Mitsubishi (up 71.3%), Genesis (up 45.1%) and Nissan (up 31.6%).

The top three passenger cars in the first quarter were the Tesla Model 3 (11.6%), Toyota Camry (11.5%) and Honda Civic (10.7%).

For light trucks, the Tesla Model Y led with 6.8%, followed by the Toyota RAV4 (4.9%) and Honda CR-V (4.0%).

In Northern California, new vehicle registrations rose 6.4%, with battery electric vehicles making up 24.6% of the market. Southern California saw a 4.1% increase in total registrations, though passenger car sales dropped 3.1%. Light truck sales were up 7.1%, with BEVs accounting for 23% of the market, according to the report.

Used vehicle registrations increased 2.3% in the first quarter compared with last year. Sales of 3-year-old or newer vehicles rose 5.6%. The top sellers in this segment included the Toyota Camry, Honda Civic and Tesla Model 3, the report shows.

Topics Trends California Auto

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