Softening sales of motor vehicles point to less consumer spending on hard goods and business investment in equipment as the third quarter 2025 progresses.

Sales of motor vehicles slow to a 16.1 million unit seasonally adjusted annual rate in August after 16.5 million units in July. The August sales pace is nearly the same as the consensus of 16.0 million units in the Econoday survey of forecasters. Sales of domestically produced motor vehicles dip to 12.76 million units in August from 12.8 million units in July. Domestic motor vehicles sales account for 78 percent of all sales in August, matching the record highs in May and June.

Sales of passenger cars are up slightly to 2.669 million units in August from 2.615 million units in July. Sales of light trucks which includes minivans, SUVs, and crossovers are little changed at 13.400 million units in August from 13.932 million units in July. Sales of light trucks account for 83 percent of all sales, down a tenth from the record high of 84 percent in July. Consumers' preference for light trucks continues to dominate sales regardless of costs like fuel and insurance.

Sales of heavy trucks in most cases a business investment in equipment continues to soften for a fourth month in a row. There are 422,000 units sold in August from 442,000 in July. Businesses that could get ahead of higher prices for vehicles made their investment in equipment in late 2024 and early 2025 before higher tariffs pushed up costs. Current economic uncertainty will push back all but the most necessary purchases for the time being.

Unit sales of motor vehicles, published by the Bureau of Economic Analysis at the beginning of each month, include domestic sales and imports. Domestics are sales of autos produced in the U.S., Canada, and Mexico. Imports are U.S. sales of vehicles produced elsewhere. The data track all passenger cars and light trucks up to 14,000 pounds gross weight (including minivans and sport utility vehicles). Though totals include a relatively small portion sold to businesses, motor vehicle sales are good indicators of trends in consumer spending and often are considered a leading indicator at business cycle turning points.

Since motor vehicle sales are an important element of consumer spending, market players watch this closely to get a handle on the direction of the economy. The pattern of consumption spending is one of the foremost influences on stock and bond markets. Strong economic growth translates to healthy corporate profits and higher stock prices. The bond market focus is on whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth. This balance was achieved through much of the nineties. For this reason alone, investors in the stock and bond markets enjoyed huge gains during the bull market of the 1990s.

Retail sales growth did slow down in tandem with the equity market during the 2001 recession but then, boosted by a low interest rate environment, rose sharply through 2007 before falling sharply during the Great Recession. Sales then recovered and, once again boosted by low rates, began a long period of steady and favorable growth.

In a more specific sense, auto and truck sales show market conditions for auto makers and the slew of auto-related companies. These figures can influence particular stock prices and provide insight to investment opportunities in this industry. Given that most consumers borrow money to buy cars or trucks, sales also reflect confidence in current and future economic conditions.