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Bank of America analysts have turned more cautious on the U.S. auto sector, cutting their sales and production forecasts for the coming years as higher tariffs and a weaker economic backdrop threaten demand. In a research note following second-quarter earnings, the firm said it now expects both U.S. sales and North American production to undershoot prior estimates between 2025 and 2030.
For 2026, Bank of America projects U.S. auto sales will decline 3% year-over-year to 15.6 million units. That’s well below its earlier forecast of 16.9 million. Production across North America is also expected to take a hit, falling 2.5% to 14.8 million units compared with a prior view of 16.4 million.
The downgrade reflects two main pressures: affordability challenges for consumers and tariffs that could raise vehicle prices. According to Cox Automotive data cited by the bank, the average U.S. consumer currently needs about 37 weeks of income to afford a new car. That figure is expected to stretch to 38 weeks in 2026 as prices climb further. Analysts estimate tariffs could add roughly 2.5% to sticker prices, with automakers likely passing much of that burden on to buyers.
So far, 2025 has tracked expectations. U.S. auto sales are running at a seasonally adjusted annual rate of 16.3 million, and inventories stood at 2.5 million in August. But Bank of America flagged the risk of a “noticeable slowdown” in the fourth quarter, when consumers may feel the pinch of higher financing costs and elevated living expenses more acutely.
Looking beyond next year, the analysts warned that tariffs will remain a “major risk” to the industry’s recovery. Their baseline forecast keeps U.S. sales below 16 million units until at least 2028. That suggests the market will stay constrained for several years, even if broader economic conditions improve.
The bank also noted that tariffs could spark some production shifts from Mexico and Canada into the United States, as automakers look to reduce costs and avoid trade penalties. But any benefit would be “marginal,” the analysts said, given the scale of structural challenges facing the industry.
For automakers, the report underscores a difficult balancing act: managing costs and supply chains while trying to keep vehicles affordable for consumers already stretched by high prices and tighter credit. Investors are likely to watch closely how companies adjust production plans and pricing strategies as trade policies and economic conditions evolve.