Despite the disruptions of tariffs and the war in Iran, recent data indicates the automotive market remains resilient and “one of the pillars of U.S. economic growth,” wrote Perc Pineda, chief economist for the Plastics Industry Association (PLASTICS), in his latest economic analysis.

“Over time, U.S. automobile and light-truck manufacturing has become increasingly integrated with a diverse global supply chain for parts and components while facing intense competition from imports. This combination has made the industry more vulnerable to external shocks and policies that increase production costs,” Pineda wrote in a blog post.

He said auto and light-truck sales were estimated at a seasonally adjusted annual rate (SAAR) of 16.6 million units in June and 16.3 million units in July. Sales have remained above 16.0 million units for the past four months.

“This stability is notable given uncertainty surrounding tariffs, vehicle prices, interest rates, and energy costs. The geopolitical conflict involving Iran also presents a potential demand-side risk through higher gasoline prices,” Pineda wrote, but so far that has not resulted in a significant deterioration in vehicle sales.

The Consumer Price Index (CPI) for new vehicles rose 0.5 percent year-over-year in June, virtually unchanged from March and matching its average increase over the past 12 months, indicating that tariffs have not driven up prices enough to diminish demand; automakers have absorbed some costs while passing others on to consumers.

The Producer Price Index (PPI) for motor vehicle manufacturing increased 1.6 percent year-over-year in June, matching its average increase over the past 12 months. But the PPI for motor vehicle parts manufacturing rose 2.1 percent year-over-year in June, compared with a 2.0 percent average increase over the past 12 months and a 1.4 percent increase in June 2025, which could eventually lead to higher prices, he said.

Interest rate cuts have eased borrowing costs, and any further cuts could support more automotive demand, but will not necessarily offset the pressures of higher vehicle and gas prices.

“For now, the data point to resilience rather than deterioration. Sales remain above 16 million units, new-vehicle price increases are moderate, motor vehicle orders are growing, assemblies have returned to levels last seen in 2023, and North American production is edging higher,” Pineda wrote.

“For an industry that remains a key end market for plastics, the current picture is encouraging. Automotive demand has held up despite a challenging policy and geopolitical environment, but affordability and production costs remain important risks to watch.”