Shares of General Motors fell about 4% on Thursday after the company reported a sharp decline in first-quarter sales, highlighting mounting pressure on the auto industry from high borrowing costs, elevated vehicle prices, and rising fuel costs.
The Detroit-based automaker said it sold 626,429 vehicles between January and March, marking a 9.7% decline from a year earlier—its steepest drop in nearly four years.
The company attributed part of the weakness to “severe winter weather” early in the quarter, though it noted that March was a “much stronger month.”
The comparison was also skewed by unusually strong sales in March 2025, when concerns over potential tariffs under President Donald Trump prompted a surge in purchases.
High rates and prices hit demand
Industry-wide pressures have weighed heavily on consumer demand. High interest rates and elevated vehicle prices have made car ownership increasingly expensive, even before the full impact of rising gasoline prices is felt.
“Abnormal is now normal,” GM North American chief Duncan Aldred said, speaking at an event ahead of the New York Auto Show.
Aldred added that he expects sales to improve as the year progresses, noting that last year’s strong performance created a tough comparison base.
According to research firm, J.D. Power, US new-vehicle sales are expected to fall 7% in the first quarter compared with a year earlier, marking the largest quarterly decline since mid-2022. Data from Kelley Blue Book also pointed to a similar trend, reflecting broader weakness across the sector.
Affordability remains a key concern. Buyers financed an average of $43,899 in the first quarter, a record, according to car-shopping platform Edmunds. At the same time, insurance costs have continued to outpace overall inflation, further raising the total cost of ownership.
Industry slowdown broadens
The slowdown is not limited to GM. Ford Motor saw US sales fall about 9%, while Tesla delivered 358,023 vehicles, missing expectations. Honda posted a 5% drop, while Hyundai reported a modest 1% gain. Toyota sales were largely flat.
David Christ, Toyota’s US sales chief, highlighted shifting consumer behavior. “People are taking a little longer to make the decision, and when they make the decision, they’re saying ‘Do I really have to do this?’”
The broader macroeconomic backdrop has also weakened.
Job creation has slowed to “virtually zero” and inflation remains elevated, according to Cox Automotive. Chief economist Jeremy Robb noted, “We saw stronger consumer spending and improving demand early in the quarter, but the war in the Middle East has altered the direction.”
The electric vehicle segment has also faced setbacks.
EV sales dropped 28% in the first quarter following the expiration of a federal tax credit last fall, further weighing on overall industry volumes.
Fuel prices and outlook
Rising fuel prices are emerging as another key headwind.
The national average gasoline price crossed $4 per gallon for the first time since 2022, raising concerns about consumer spending and vehicle preferences.
A note from Oxford Economics suggested that while conditions improved in March after winter disruptions eased, “sales will face major headwinds as higher gas prices due to the US-Iran war take a bite out of consumers’ real disposable income growth.”
Despite near-term challenges, some analysts remain optimistic.
Alexander Potter of Piper Sandler maintained a Buy rating on GM, with a price target of $105.
As the year progresses, the trajectory of fuel prices and geopolitical tensions will likely play a decisive role in shaping demand, leaving the auto sector navigating an increasingly uncertain landscape.
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