We recently compiled a list of the 13 Best Car Stocks To Buy In 2025.In this article, we are going to take a look at where Lithia Motors, Inc. (NYSE:LAD) stands against the other car stocks.

Car stocks are the stock holdings of businesses engaged in the automotive market, such as those that produce automobiles, auto parts, or industry-related services.

According to Reuters, U.S. new car sales in 2024 grew significantly from their pandemic lows due to increased production, restocked inventory, and growing demand for hybrid cars. As per Wards Intelligence, new car sales in the United States hit 15.9 million in 2024, up 2.2% from 2023 and the highest since 2019.

In 2025, S&P Global forecasts that global sales of new light vehicles, or passenger cars and trucks, are projected to rise 1.7% to 89.6 million units. The overall reduction of 2025 automotive estimates reflects anticipated changes in US policy following the election. There will be significant impacts on the demand for vehicles as a result, particularly on interest rates, trade flows, sourcing, and the rates of BEV adoption.

Colin Couchman, executive director of global light vehicle forecasting for S&P Global Mobility, commented:

“2025 is shaping up to be ultra-challenging for the auto industry, as key regional demand factors limit demand potential and the new US administration adds fresh uncertainty from day one,” “A key concern is how ‘natural’ EV demand fares as governments rethink policy support, especially incentives and subsidies, industrial policy, tariffs, and fast evolving OEM target setting.”

Chris Hopson, principal analyst at S&P Global Mobility, recently stated that consumers who are considering buying a new car are hurrying to dealers before possible price implications become apparent. The sales spikes in March and April might open the way for future volatility. In the next three months, automakers will face new, tariffed inventory and production levels in addition to unstable economic conditions.

In response to industry criticism, President Trump recently introduced a two-year relief provision linked to domestic sales and manufacturing volume, which loosened the recently imposed 25% tariffs on cars and parts. Now, automakers with U.S. factories can deduct import taxes on parts, starting at 3.75% of the suggested retail price of a car in the first year, and then 2.5% in the second year. Vehicles with 85% U.S., Canadian, or Mexican parts are exempt from tariffs, which will rise to 90% by next year. Furthermore, the administration exempted these companies from overlapping taxes on Canadian and Mexican commodities, steel, and aluminum. After industry groups warned that the duties, which went into effect in March for automobiles and on May 3 for parts, would increase auto prices, lower sales, and negatively impact service costs, the move was made.

Story Continues

GM chief executive Mary Barra stated:

“We’re grateful to President Trump for his support of the US automotive industry and the millions of Americans who depend on us,”

Nonetheless, there will be plenty of fireworks as leading businesses compete for market share because the automotive industry is still evolving. According to Dentons, the automotive industry will need to be adaptable, creative, and flexible in 2025 as it manages changing consumer demands, regulatory changes, and economic challenges. In a market that is competitive and evolving quickly, Original Equipment Manufacturers can position themselves for success by taking advantage of developments in manufacturing technologies, software-defined vehicles, and electric vehicles.13 Best Car Stocks To Buy In 2025

A customer in a store, examining a new vehicle on the showroom floor.

Methodology:

For this article, we sifted through the online rankings to form an initial list of the 20 Car Stocks. From the resultant dataset, we chose 13 stocks with the highest number of hedge fund investors, using Insider Monkey’s database of 1,009 hedge funds in Q4 2024 to gauge hedge fund sentiment for stocks. We have used the stock’s YoY revenue growth as a tie-breaker in case two or more stocks have the same number of hedge funds invested.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).

Lithia Motors, Inc. (NYSE:LAD)

Number of Hedge Fund Holders: 45

Revenue Growth (YOY): 16.58%

Lithia Motors, Inc. (NYSE:LAD) is the largest auto dealer in the United States. It is a new and used vehicle retailer that also provides related services. The company has almost 500 outlets in the United States, Canada, and the United Kingdom, offering over 50 vehicle brands. The company has primarily grown by acquiring dealerships in smaller regional areas, but it now aims to expand throughout the United States, and Morningstar analysts anticipate more deals in the US as well as abroad in the years to come. Revenue in 2024 was $36.2 billion, and in the coming years, analysts anticipate revenue of above $50 billion. The United States accounted for 78% of 2024 revenue, with the United Kingdom coming in second at 19%, due to the 2024 Pendragon acquisition. Sales of new cars accounted for almost 49% of overall revenue in 2024.

John Murphy, a BofA analyst, maintained his Buy recommendation on Lithia Motors, Inc. (NYSE:LAD) shares and increased his price target from $410 to $460. The business reduced its North American car production projection to 16.1 million from 16.7 million due to plant downtime and a significant rise in Chinese imports to Mexico. The company says that dealer commentary for 2025 was positive and indicated “another year of solid growth,” characterized by rising volumes, steady pricing, and ongoing execution.

In Q1 2025, Lithia Motors, Inc. (NYSE:LAD) announced robust earnings growth, with adjusted diluted earnings up 25.4% year over year and diluted earnings per share rising 34.8% to $7.94. The business made $9.2 billion, a 7% rise over the same time last year, setting a new sales record. A major highlight was the 38.8% rise in the value of auto sales from the previous year. The warranty work gross profits grew by a noteworthy 19.7%, while the after-sales segment witnessed a strong performance, with gross profit rising by 7.5%.

Overall, LAD ranks 6th on our list of the Best Car Stocks To Buy In 2025. While we acknowledge the potential of LAD as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than LAD but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.

Disclosure: None. This article is originally published at Insider Monkey.

View Comments