Major auto-exporting nations are in crisis mode after President Trump announced new 25 percent tariffs on imported cars and auto parts, starting April 3, that will hit popular brands from Toyota to Porsche.

Nearly half of new passenger vehicles sold in the U.S. in 2024 were assembled outside the U.S., according to data from S&P Global Mobility. Most come from five nations: Mexico, Japan, South Korea, Canada and Germany.

Economic driver

Cars drive the economies of these nations and typically account for a big proportion of exports. 

U.S. auto tariffs could reduce economic growth in Japan by 0.2 percentage point, said Takahide Kiuchi, executive economist at Nomura Research Institute. If Japanese carmakers shift production to the U.S., they would maintain sales but “it would be a headwind for the Japanese economy,” he said.

The automotive industry is also a linchpin of the European economy, accounting for 7 percent of the European Union’s economic output. For Germany, auto exports to the U.S. account for close to half a percent of value added in the economy, according to Capital Economics.

The impact of tariffs would stretch deep into the German supply chain. Roughly a third of small and midsize automotive suppliers surveyed by the country’s automotive trade association last month expected to be directly affected by U.S. tariffs.

More than a dozen global automakers operate close to 40 plants in Mexico, including General Motors, Mercedes-Benz, BMW, Hyundai and Toyota. The country exported almost three million vehicles to the U.S. and supplied 40 percent of U.S. auto parts last year. Close to two million Mexicans work in the vehicle and auto-parts industries, with exports last year close to $200 billion.

Brian Kingston, the head of the Canadian Vehicle Manufacturers’ Association, said there has been more than $280 billion of investment in the North American auto industry since 2020, most of which was in the U.S. and all of which was done under the U.S.-Mexico-Canada Agreement that Trump signed in 2018. Canada’s auto sector employs more than 125,000 people and produced roughly 1.3 million cars last year, most of which were exported to the U.S.

Big exporters

The world’s biggest carmaker, Toyota, shows how the industry relies on exports to the U.S. American showrooms for Toyota feature Prius hybrids made in Japan, RAV4 sport-utility vehicles made in Canada and Tacoma pickups from Mexico. 

Last year, Toyota sold 2.3 million vehicles in the U.S. About a quarter of those vehicles came from Japan, and an additional quarter or so were shipped from Canada and Mexico. The remaining half were built in the U.S., a Toyota spokesman said.

Many non-U. S. automakers get a quarter or more of their sales in the U.S.

rump said he wanted the carmakers to move their production to the U.S. Hyundai said at the White House on Monday that it would invest an additional $21 billion in U.S.-based car manufacturing and supply chains for critical materials, including a $5.8 billion steel mill to be built in Louisiana.

German luxury brands Mercedes-Benz and BMW have developed manufacturing bases for sport-utility vehicles in the U.S. in recent decades, but they continue to ship sedans across the Atlantic as well as engines and transmissions for the SUVs.

All the vehicles sold in the U.S. by Audi and Porsche, both owned by Volkswagen, are imported. Honda’s exports to the U.S. include the made-in-Canada CR-V and Civic and Mexico-produced HR-V. Hyundai’s exports include the hybrid Tucson and Palisade SUV. 

Governments hit back

South Korea said it planned emergency support for the auto industry. Trade minister Ahn Duk-geun said the industry faced “considerable damage.” Japan said it would ask Trump for a tariff exemption, and Prime Minister Shigeru Ishiba said retaliation was an option.

In Brussels, European Commission President Ursula von der Leyen condemned the tariffs as “bad for businesses, worse for consumers,” while saying the EU would seek negotiated solutions.  

German Economy Minister Robert Habeck said the EU should respond decisively and “not give in to the U.S.”

In Mexico, the government plans to step up efforts to obtain preferential tariff treatment from the U.S., particularly in the automotive sector where both countries are highly integrated. “What we are looking for is that the products made in Mexico ultimately have a better price than any other country—such as Germany, Japan, South Korea—that also exports to the U.S.,” Economy Minister Marcelo Ebard said Thursday.

One Canadian government official said that Commerce Secretary Howard Lutnick reached out to Doug Ford, the leader of the province of Ontario, and suggested that Canada could get a break on the tariffs that Trump announced on Wednesday.

U.S. tariffs on goods from Canada and Mexico could be felt particularly acutely by automakers — and car buyers — because of the number of vehicles and parts that come into the United States every day as they head to market.

President Trump has threatened to put tariffs as high as 25 percent on goods from Canada and Mexico, the nation’s two closest trading partners. On Wednesday, he suspended that threat for cars for one month.

Even with the reprieve, he stressed that he expected automakers to, as Karoline Leavitt, the White House press secretary, said: “Get on it, start investing, start moving, shift production here to the United States of America, where they will pay no tariffs.”

zone was created in 1994, automakers have built supply chains that cross the borders.

Manufacturers achieve economies of scale by building engine and transmission plants that are large enough to supply a number of vehicle factories in North America. Similar thinking works for other parts, too — seats, instrument panels, electronics, axles.

“That harnesses the strength of each country, to the betterment of the companies and to the consumer,” said Sam Fiorani, a vice president at AutoForecast Solutions, a research firm. “Vehicles would be less affordable if all the parts had to be made in one country.”

Ultimately a vehicle is considered an import when it is shipped to the United States after undergoing final assembly in another country. But because of how complex supply chains have become, it is increasingly hard to say which vehicles are American-made and which are imported.

The 2024 Chevrolet Blazer, a popular sport utility vehicle made by General Motors, is assembled in a plant in Mexico using engines and transmissions that are produced in the United States.

Nissan makes its Altima sedan in Tennessee and Mississippi; the turbocharged version of the car has a two-liter engine that comes from Japan, and a transmission made in a factory in Canada.

Then there’s the Toyota RAV4. Most RAV4s sold in the United States are made in Canada. The Canadian-made models use engines and transmissions that are built in the United States and shipped north — before the completed vehicles are transported into the United States for sale.

The Trump administration has not yet elaborated on how tariffs would be applied to components like engines that were shipped across the border and then returned to the United States as part of completed vehicles.

While the RAV4 is technically imported from Canada, about 70 percent of the vehicle’s components — as measured by their value — come from the United States, according to the National Highway Traffic Safety Administration, which tracks the place or origin of parts that go into vehicles sold here.

The Nissan Rogue S.U.V. goes the other way. It qualifies as a domestically produced vehicle because it is assembled at Nissan’s plant in Smyrna, Tenn. But only 25 percent of its content originates in the United States. The 2024 version’s engine comes from Japan and its transmission from Mexico, according to data from the traffic safety agency.

The threat of tariffs has automakers fretting. “Let’s be real honest,” Ford Motor’s chief executive, Jim Farley, said at an investor conference in February. “Long term, a 25 percent tariff across the Mexico and Canada borders would blow a hole in the U.S. industry that we’ve never seen.”

The chairman of Stellantis, John Elkann, said recently that his company supported Mr. Trump’s desire to promote American manufacturing, but added that the company — whose brands include Chrysler and Jeep — felt that trade with Mexico and Canada should remain “tariff free.”

Over the last 20 years, the number of imported vehicles sold in the United States has remained relatively constant, with dips caused by the financial crisis of 2008-9 and the coronavirus pandemic. The largest source is Mexico, followed closely by Japan, South Korea and Canada.

During that time, the number of cars produced in the United States has fluctuated. Domestic production exceeded 12 million vehicles in 1999, but this figure plummeted during the recession. Since then, the industry showed a strong rebound as fuel prices stabilized and consumer confidence returned, though the production volumes never fully regained the numbers seen in the early 2000s.

For many consumers, where their car comes from isn’t much of a concern. Frank Krieber, a retired tech executive from Charlotte, N.C., bought a Chevrolet Tahoe a few months ago. He assumed it was an American vehicle — and indeed, it is assembled in Arlington, Texas. But slightly more than a third of its parts are made in the United States, and about the same amount come from Mexico, according to the National Highway Traffic Safety Administration.

“I don’t mind the Mexican content,” Mr. Krieber said. “If it was made in Mexico instead of Texas, I still would have bought it.”

A look at the long-term trend in OEM consolidation

By Glenn Mercer

Winter is the season of marriage proposals: in much of the world it’s the most popular time to pop the question.¹ And it seems now the entire global automotive industry has decided love is in the air, what with Honda and Nissan apparently headed to the altar². The usual rationale has been dusted off and revived: “We need more scale, to pay for [ fill in the blank ] EV / AV / mobility services / software / platforms / a bigger headquarters / banker fees…”

The track record of scale-seeking mergers is shaky at best: one could enumerate dozens of tie-ups that flopped. And evidence on scale economies in automotive is itself weak, such that the late lamented Sergio Marchionne was (possibly apocryphally) once quoted as saying that “The minimum economic scale of a car company is always 2 million units larger than the size of the company of whose CEO you asked the question!”

We’ll leave the pro and con M&A debate aside for now (though contact me if you want a look at my own research into the topic) but instead just present a possibly-relevant chart on: just how consolidated is the global OEM industry? Have we been marching our way to conglomerations which control ever-larger shares of the market?

Um, no.

The share of global light duty vehicle production controlled by the ten largest OEM groups has been gently drifting downwards. I was too lazy to go back and look before 2001, but I do have an old chart showing a figure of 82% for 1990, supporting my point further.

The shifts behind this result include among other factors the two big Americans of GM and Ford retreating back to their profitable home market, and Chinese entrants such as SAIC and BYD rapidly growing.

But the rationale, or lessons learned, from this chart are harder to parse. Are OEMs avoiding M&A because they feel they are already big enough to compete (that is, are returns to scale – beyond a certain point – just not as strong as we might have thought they were)? Or are they collectively being foolish about this and had better step up growth (organic or via merger) right away? Or do we think that even if the scale effects are there, they are just too hard to capture via M&A? (Again, let’s face it, a lot of tie-ups, maybe even most, have failed to deliver.³)

So I don’t know what to read into this curve: it could equally indicate we think M&A is not the answer… or, that a new M&A wave is long overdue. So as they say in the rom-com movies, as Honda and Nissan approach the altar: “Speak now or forever hold your peace.”⁴

---

(By the way, I acknowledge that the calculations underlying this line are fraught. In drawing this, one has to decide questions such as: do I include the truck divisions of OEMs? do I count sales or do I count production? was Mazda “part of” Ford back when, or should I count it separately? etc. We can argue these points, but the reason I went back so many years with the chart is to allow time for the puts and takes to somewhat average out and cancel each other out.)

1 As always, Car Charts eschews opinions for facts. See “Winter continues to be the most popular season for couples to get engaged, most notably in North America and Western Europe.” From the Global Wedding Report. You don’t get sources like these in other automotive publications, now do you?

2 If you think that is a strange pairing, well go back and reflect on the successive Chrysler weddings (not even counting AMC and Mitsubishi): DaimlerChrysler, CerberusChrysler, FiatChrysler (Fiat itself rebounding from a brief fling with GM), and now Stellantis. See the world’s expert on serial marriages, Zsa Zsa Gabor, who said “A girl must marry for love… and keep on marrying until she finds it.”

3 And M&A has working against it the need for fast action. More than one OEM executive who has been through the merger mill has told me it takes something like two years just for everyone to figure what they are doing, in the new combined entity (and for all the jockeying for the diminished number of C-suite spots to play out). If you have to move as fast as say, BYD, today, can you afford to divert all your managers into merger-integration work?

4 Naw. We’ll second-guess all this endlessly after the fact, regardless! Human nature dictates we’ll never “hold our peace.” So therefore I have a few comments to make about the Cleveland Browns Watson decision back in 2022…

CES 2025 showed an auto industry tiptoeing toward reinvention.

Automakers, suppliers and technology companies’ announcements centered on strategy and fulfilled promises, rather than splashy surprises. The convention also foreshadowed the industry’s concern over how the incoming Trump administration may upend policies and plans already in motion.

The new technologies are “not as bold and aggressive as they used to be in past years. You don’t see these over-the-top claims of where the innovation is going to be. It’s much more tangible,” said Marques McCammon, president of luxury vehicle startup Karma Automotive. “There’s a little bit of uncertainty in the industry.”

Big suppliers such as American Axle & Manufacturing generally know automakers’ product direction — and plan their own business based on expected orders. “But they’re obviously in flux” as the industry awaits regulatory changes, said Tony Pistagnesi, executive director of innovation and business development for the drivetrain supplier.

New regulation under the Trump administration will be “a big driver of the decisions that we’re going to have to make about vehicle architectures, and hybrids versus plug-in hybrids versus EVs,” Pistagnesi said. “I’m not saying we’re waiting around to see. We’re all moving ahead, but that’s going to be very impactful.”

President-elect Donald Trump is expected to derail many of the carbon reduction policies and incentives that the Biden administration put in place, pushing much of the industry to reconsider EV plans.

Where once EVs were the highlight of the show, two weeks before Trump takes office, few were on display in the sprawling Las Vegas Convention Center for the roughly 140,000 showgoers.

Honda shared production plans for the EVs it announced at last year’s show, and Scout Motors, a Volkswagen Group-backed startup, showed the extended-range hybrid versions of its electric Traveler SUV and Terra pickup, rather than the battery-electric models.

“There’s a lot of stress on the investments made in electrified vehicles and now some of that is being returned to hybrid vehicles,” said Mark Wallace, CEO of battery supplier Clarios.

Tech giants shape the auto industry

Still, the excitement around the technology of tomorrow offered an optimistic backdrop to the policy uncertainty of today.

Legacy suppliers and automakers touted new partnerships with companies at the forefront of advanced technology and artificial intelligence, including Amazon Web Services, Nvidia and Qualcomm.

Qualcomm has typically focused on new products at CES, said Nakul Duggal, the supplier’s group manager for automotive, industrial and cloud businesses.

This year, the show was about “the amount of technology change that is happening around us, across the industry,” he said.

Qualcomm leaders believe, for the first time, that the auto industry is embracing technology change as efficiently as other industries are, he said.

Qualcomm showcased its tech prowess in demonstrations, “but more importantly, a lot of our partners are showcasing the same thing: Tier 1 partners, ecosystem partners, OEMs,” Duggal said.

“That doesn’t happen very often,” he said. “It’s true across Gen AI. It’s true across [advanced driver-assistance systems], automated driving, a lot of new experiences. That feels pretty good.”

At least 10 suppliers, vehicle technology providers, automakers and even a motorcycle brand announced partnerships with the chipmaker during the show.

Chipmakers have become the titans of the automotive side of CES in recent years. Nvidia CEO Jensen Huang’s keynote drew an enthusiastic crowd that lined up hours before he took the stage.

Nvidia’s automotive portfolio spans traditional automakers, EV makers, robotaxi businesses, truck manufacturers, top suppliers, sensor developers, factories and cloud computing.

“Each car company might work with us in a different way,” said Huang, but “we’re working with just about every major car company around the world.”

Huang predicted autonomous vehicles, powered by chips and AI, will be the first trillion-dollar robotics industry.

Nvidia intends to accelerate autonomous vehicle and humanoid robot development with its latest advancement.

Nvidia Cosmos, unveiled at CES, relies on AI underpinned by world foundation models that use text, image, video and movement to simulate virtual worlds. Developers can customize the models with data, such as video recordings of autonomous vehicle trips. Nvidia is trying to narrow the gap between simulations and real life, which will more quickly train autonomous vehicles for all driving scenarios.

Nvidia teased its new technology as robotaxi company Zoox, an Amazon subsidiary, tested its AVs along the Las Vegas Strip. Zoox plans to launch an autonomous ride-hailing service this year.

AI has enabled humanoid robots and autonomous driving “to come to life,” said Jeff Hamphill, chief technology officer for powertrain supplier Schaeffler in the Americas. “These things are really coming to pass now, and it’s just a tremendous opportunity for a lot of companies, and certainly for us.”

Despite the enthusiasm for self-driving technology, commercializing autonomous vehicles “remains pretty difficult and expensive,” said Jeremy Carlson, associate director at S&P Global Mobility. “There’s not necessarily an immediate return on any of that investment. It’s still a long runway for these companies.”

Chinese EV, tech competition

A couple of Chinese automakers — Zeekr and Great Wall — used CES as a venue to show new vehicles and technology.

“Zeekr is probably the star of the show in terms of the automotive section,” said Robby DeGraff, manager of product and consumer insights at AutoPacific. “There was so much interest and curiosity for the Zeekr brand.”

Zeekr, part of Geely Holding Group, displayed three electric models: The Mix van, which is also the Zeekr RT robotaxi used by Waymo; the 001 FR, a limited-edition, high-performance sedan; and the 009, a luxury multipurpose van.

The Zeekr press conference, in a relatively small room, was standing room only, and the reporters swamped the cars to take turns sitting inside after the company’s remarks, DeGraff said.

Great Wall Motor showed a three-row crossover and demonstrated gesture technology that allows passengers in the back seat to use their hands as a virtual mouse to control the infotainment screen.

“If I had to pick a word to describe the Chinese tech and the automotive products, it’s ‘humbling,’” DeGraff said.

Otherwise, automakers’ presence at CES was muted. Honda and Sony Honda Mobility shared details on previously announced vehicles, BMW showed a new panoramic infotainment system and Toyota focused on its Woven innovation hub. Exhibits from General Motors, Ford, Hyundai, Kia and other leading automakers were noticeably absent, but automaker representatives were in Las Vegas, said Neil Boehm, COO at vehicle mirror and technology supplier Gentex.

“They’re still out here looking for partnerships and suppliers to bring new technology because they know they have to change what they’re doing,” Boehm said.

Laurence Iliff, Jack Walsworth, Pete Bigelow, John Irwin, Molly Boigon and Richard Truett contributed to this report.

Demand for pickup trucks and hybrid vehicles helps automakers increase deliveries; challenges loom for 2025

The auto industry eked out a small increase in U.S. vehicle sales for 2024, helped by better availability on the new-car lot and a flurry of promotional deals in recent months. 

U.S. dealers sold 15.9 million vehicles last year, up 2.2 percent from 2023, according to an estimate Friday from research firm Wards Intelligence. A robust holiday selling season lifted the final tally, with December car sales growing 6 percent.

For 2025, analysts see another small rise in car sales, but also some potential trouble spots. New cars are still expensive, especially with interest on car loans pushing average monthly payments above $750. 

The electric-vehicle transition has been slower to materialize than many car executives expected. And President-elect Donald Trump’s proposal to place steep import tariffs on goods from Canada and Mexico could disrupt the industry and make the cheapest new cars significantly more expensive.

Here is a look at crucial aspects of the U.S. auto market heading into 2025:

More cars on the lot

Vehicle availability has continued to bounce back from pandemic-era lows, when supply-chain disruptions shrank the number of cars at U.S. dealerships to about one million in late 2021. Last month, that number had rebounded to about 2.7 million vehicles, according to research firm Wards Intelligence.

As production has recovered, automakers have been offering more promotions, such as cash-back deals and low-interest financing, to keep sales moving. Car buyers received on average about $3,400 in incentives last month, an increase of 25 percent from a year ago, according to J.D. Power data.

Car payments are still high

Even as new car prices have eased, car payments haven’t, primarily because of high interest rates. The average monthly payment on a new-car loan was $753 as of November, up from $738 a year earlier, according to car-shopping site Edmunds.

The Federal Reserve’s moves to trim short-term interest rates in late 2024 haven’t translated into much relief for vehicle shoppers, with interest rates on new-car loans hovering around 7 percent and rates for used cars around 11 percent according to Edmunds data.

Bright prospects for hybrids

Electric vehicles continue to increase as a share of the U.S. auto market, but conventional hybrids notched the biggest gains in 2024, according to Cox Automotive.

Hybrid versions of popular gas-powered models, such as the Toyota Camry and Honda Civic, use small batteries to improve the fuel economy on their gas engines. These cars don’t plug in or run on electricity alone, meaning consumers don’t have to change their driving habits.

Toyota Motor, the leader in hybrid vehicles, said U.S. sales of hybrids and EVs rose more than 50% last year, accounting for 43% of its total sales. 

David Christ, general manager of Toyota in North America, said hybrid versions of popular models, such as the RAV4 SUV, sell at a faster pace than their gas-powered counterparts, despite prices that are about $2,000 higher on average.

“It’s worth it to them to pay that additional price to get the hybrid,” Christ said in an interview Friday.

Winners and losers: Mazda and Honda gain; Jeep, Ram and Tesla retreat

Japanese automakers Mazda and Honda grabbed U.S. market share in 2024, based on preliminary figures from Cox.

Mazda’s sales climbed 16 percent, benefiting from a yearslong strategy to remodel its dealerships and move upmarket with pricier SUVs.

Rivian’s shares surged 24 percent on Friday after the electric-truck maker said it delivered 14,183 vehicles in the fourth quarter, above the 13,000 estimate of analysts polled by FactSet. For the year, the company’s 51,579 vehicles sold was in line with Wall Street’s forecasts.

Stellantis, the parent of Jeep and Ram, was the U.S. market’s underperformer in 2024, with sales sinking 15 percent. U.S. dealers have complained throughout the year that high prices on Jeep SUVs and Ram pickups chilled sales. Troubles in the U.S. market contributed to the departure last month of Stellantis Chief Executive Carlos Tavares.

Tesla, the leader in the U.S. electric-vehicle market, reported a global sales decline in 2024 after more than a decade of growth. The Texas-based company headed by Elon Musk doesn’t disclose country-specific sales, but Cox estimates its U.S. sales suffered a decline of about 6 percent in 2024. 

Car buyers are moving back toward leasing, with the share of sales completed through leases rising from 20 percent in 2023 to 24 percent last year, according to credit-reporting firm Experian.

Leasing offers consumers a new car at a lower monthly payment, making the option attractive given the effect of high interest rates on purchase loans.

Leases are on the rise partly because some electric vehicles qualify for federal incentives only through leases, helping drive the share of EV sales through leasing to 72 percent as of November, according to Edmunds.

Write to Christopher Otts at christopher.otts@wsj.com

The U.S. car industry has a ‘big case of anxiety’ about the president-elect’s proposed 25 percent tariff on imports from Mexico and Canada

Finding an affordable car in the U.S. has already become a challenge for many budget-constrained Americans. New import tariffs on Mexican-built vehicles threaten to make the problem worse.

Today, nearly one-third of all vehicles priced below $30,000 and sold in the U.S. are built in Mexico, including the Nissan Sentra, Ford Maverick and other popular nameplates, according to an analysis by car-shopping website Edmunds. A decade ago, Mexico was responsible for one-fifth of the affordable cars sold in the U.S., the firm’s data shows.

Sales of smaller cars and compact SUVs have been on the rise with more shoppers giving priority to affordability

Stubbornly high car prices and elevated interest rates are persuading more Americans that when it comes to their next car purchase, bigger isn’t always better.

U.S. car buyers have for years gravitated to larger, roomier vehicles, a shift that had become so pronounced last decade that some automakers killed off their small-car and sedan models because of slumping sales.

But with the average monthly payment for a new car soaring to new heights in recent years, some car shoppers are moving back in the other direction.

Sales of some smaller, entry-level models, such as the Honda Civic and Nissan Sentra, have taken off this year, rising 23 percent or more through November, according to research firm Motor Intelligence. Those increases have far outpaced the industry’s growth, which has been in the low single digits this year.

Meanwhile, large pickup truck sales, long a highly profitable corner of the market for the Detroit car companies, slid 1.9 percent, data from car-shopping website Edmunds shows. Sales of midsize SUVs, the type of vehicle typically favored by families, have also declined, falling 2.3 percent over 2023.

This rising interest in smaller offerings comes as owning a car has become increasingly unaffordable. The average selling price of a new car is still at historically high levels, exceeding $45,000 in November, according to J.D. Power. Insurance premiums, financing rates and repair costs have also climbed in recent years, further stretching household budgets.

As expenses have ticked higher, some buyers have become more willing to make a trade-off, sacrificing size and space for a lower monthly payment, analysts say.

“They need the functionality that the vehicle has, but they just need to buy the smaller size,” said Charles Chesbrough, a senior economist at Cox Automotive. “It fits into their wallet.”

Whether the trend continues might depend on interest rates and fuel prices in the coming years. President-elect Donald Trump’s pledge to slap 25 percent import tariffs on goods made in Mexico and Canada could further dent affordability, as many automakers build their lower-priced cars in Mexico to take advantage of reduced labor costs.

The price differential between a large and small model can be significant. The average price paid for a small SUV this year was about $29,000, according to Edmunds. For midsize and large SUVs, consumers paid on average $48,000 and $76,000, respectively.

Toyota, Honda and other Asian brands are some of the biggest beneficiaries from this shift, having long led the market for compact sedans and SUVs, some with starting prices under $25,000. Many of these companies stood by their small-car options as rivals abandoned the category.

Some nameplates, such as the Mazda3 and Honda HR-V, have posted double-digit sales increases this year. 

In the compact-car category alone, sales rose 16 percent through November, and U.S. market share for these types of models has bounced back, after sliding in recent years, data from Edmunds shows. 

Sales of compact and subcompact SUVs have also gotten a lift, up 11.5 percent over the same period, as car companies have expanded the range of options for buyers looking for utility and a higher-riding position in a smaller package. These models now account for about 27 percent of all U.S. sales this year, up from 22 percent before the pandemic.

Large SUV sales also remain a growth spot, but that is largely because the families who tend to buy them need the extra space or hauling capability and can’t easily downsize, analysts say.

With lower price points and better fuel economy, compact cars were once seen as a way of attracting younger buyers into a brand. The strategy was to get customers hooked earlier in their life and then sell them pricier models of the same brand as they grew older and increased their spending power. 

But car shoppers began waiting until later in life to purchase new cars and trucks. Years of cheap gasoline helped cement the dominance of larger SUVs in America’s driveways and parking lots.

Automakers tuned their lineups accordingly, phasing out many sedan and hatchback models that had once been showroom staples, including well-known names such as the Ford Focus and Honda Fit.

The remaining options tend to be pricier. The number of cars priced at under $25,000 dropped to 11 this year from 45 models in 2019, according to Edmunds.

In the absence of those smaller cars, some brands have rolled out downsized SUVs at cheaper price points and designed to appeal to budget-conscious consumers.

GM-owned Chevrolet, which has discontinued nearly all its sedan models in the U.S., has found success in its diminutive SUV, called the Trax, which starts at about $20,000. Sales of the Trax jumped nearly 89 percent through November, according to Motor Intelligence.

Steven Majoros, Chevy’s marketing chief, said the Trax has resonated with consumers because it offers sought-after features, such as large media screens and advanced safety tech, at a lower price.

Some dealers have been frustrated that they don’t have much to offer price-sensitive customers.

Adam Lee, chairman of Lee Auto Malls in Maine, said he has seen trucks and big SUVs sitting around longer on dealer lots with customers looking for more affordability. It is unfortunate that many car companies trimmed the more economical parts of their lineups, he added.

“They’re like a herd of sheep,” Lee said of the car companies. “They all follow each other off the cliff.”

Write to Ben Glickman at ben.glickman@wsj.com

• Officials urge support for domestic electric-vehicle projects
• Policies to unleash autonomous vehicles also under discussion

Advisers to President-elect Donald Trump are recommending a two-pronged approach to reshape the US auto industry: cut federal subsidies to boost electric-vehicle sales while still fostering a domestic supply chain to produce them.

Taken together, the suggestions highlight how Trump’s campaign promise to “terminate” EV mandates could manifest in policies that prioritize domestic carmakers and suppliers — but without taxpayer support for consumers.

The recommendations were outlined as potential policy changes for the incoming Trump administration’s first 100 days in office, according to people familiar with the matter and a document seen by Bloomberg News. Several initiatives dovetail with the desires of conservative, free-market advocates and fuel producers who have long said the US government shouldn’t dictate what cars Americans should drive and make.

Trump’s advisers encouraged relaxing environmental reviews and speeding up permitting for federally funded EV and infrastructure projects, including the development of batteries and critical minerals, according to the document and the people, who asked to not be identified because the deliberations are private.

Read More: Trump Vows Fast Permits for Those Investing $1 Billion in US

Those projects could also potentially benefit from expanded tariffs the advisers are recommending on a suite of EV-related imports, including critical minerals, magnets, batteries, industrial control systems and assembly equipment.

At the same time, the officials are calling for a repeal of federal policies that boost consumer demand for EVs, including the $7,500 federal tax credit for purchasers of plug-in cars, according to the document, which was reported earlier by Reuters.

Biden-era fuel-economy and tailpipe pollution regulations would also be rolled back and reset to 2019 levels. US Environmental Protection Agency approvals that allow California to impose its own limits on tailpipe emissions — including a mandate for 100% EV sales in 2035 — would also be on the chopping block.

The policy options reflect a broader shift away from departing President Joe Biden’s use of industrial policy to combat climate change. Some could also potentially benefit Tesla Inc. Chief Executive Officer Elon Musk, who has emerged as a top Trump adviser and is co-leading a broad effort to identify government waste.

Automotive OEMs face increasing pressure to improve their supply chains, not only to reduce costs and improve efficiency but to meet environmental demands for a lower carbon footprint. Traditional inventory models with centralized warehouses lead to high storage costs, delays, and emissions tied to transportation. As a solution, some forward-thinking OEMs are turning to digital inventories combined with automotive 3D printing, allowing them to print spare parts on demand and locally, thus minimizing logistical burdens and aligning with sustainability goals.

The digital inventory model allows parts to be stored in a virtual form until needed. By integrating 3D printing capabilities, OEMs gain several key advantages. Unlike traditional inventories, which require physical storage, digital inventories allow parts to be manufactured as needed. This approach significantly cuts lead times and minimizes the costs associated with storing and maintaining extensive physical inventories. Localized 3D printing production can protect OEMs from global supply chain disruptions. Instead of depending on far-reaching distribution networks, OEMs can produce parts locally, thereby enhancing resilience to geopolitical and environmental disruptions.

Additionally, The environmental impact of manufacturing and logistics can be substantial. Digital inventories paired with 3D printing not only reduce the need for transportation but also cut down on material waste. For instance, printing components only when required minimizes both production waste and the associated emissions, leading to a more sustainable supply chain.

So far, there are only a handful of firms, such as Auto Additive and Würth Additive, looking to implement such a model in the automotive space. Autentica is another of a growing number of companies aiding OEMs in the digital inventory transformation. Autentica’s approach to digital inventories for the automotive sector centers around a secure platform that combines blockchain technology with non-fungible tokens (NFTs), enabling OEMs to protect and trace their digital assets throughout the supply chain.

In an interview, Autentica CEO Irma Gilbert noted that traditional inventory models are often fraught with inefficiencies and hidden costs, pointing to her own past experiences needing to travel internationally for spare parts due to a lack of local availability. “I realized there had to be a better way,” she explained, leading her to establish Autentica as a solution for digitalizing spare parts with cutting-edge security measures.

Through its NFT-backed platform, Autentica addresses a fundamental challenge in digital part distribution: intellectual property (IP) security. By embedding tokens that secure CAD files, Autentica allows OEMs to distribute digital blueprints safely, ensuring files are used only by authorized service providers. Gilbert underscores the importance of this technology, stating, “NFTs provide a unique identifier for each file, ensuring that the digital asset is protected and can only be used as intended by the OEM.”

The technology enables a seamless process where service providers receive encrypted, streamable files that can be used immediately to print needed parts. Autentica’s approach has also led to significant interest beyond automotive, with OEMs in aerospace and defense also considering similar applications. “The biggest hurdle is changing the traditional mindset of manufacturers,” Gilbert observes, but she notes that early adopters in the automotive sector are beginning to realize substantial operational improvements.