As discussed in more detail below, new car purchases can be a useful, timely economic indicator. Figure 1 below shows the statewide number of new car registrations from January 2018 through February 2025. This is a good proxy for the number of cars purchased by California residents.
New Car Registrations Down Since Strong December. From December 2024 to February 2025, seasonally adjusted new car registrations declined by 8 percent. December registrations, however, had been the highest since mid-2022. As a result, February registrations still were around the average level over the last couple of years.
Californians Still Buying Fewer Cars Than Before the Pandemic. Statewide new car registrations declined steadily for several years leading up to the COVID-19 pandemic. Like many other measures of economic activity, registrations plummeted in March and April 2020. Registrations rebounded substantially in the subsequent months but generally have remained below pre-pandemic levels. For example, registrations in February 2025 were 10 percent lower than in February 2020.
Cars a Notable, Timely Economic Indicator…Starting with this post, we plan to publish monthly updates on car registrations in California. We hope this will be useful for several reasons:
- Cars are a major category of spending. In 2024, for instance, motor vehicles and parts dealers accounted for 11 percent of the state’s taxable sales. Additionally, consumers often borrow money to buy cars, likely making this indicator particularly sensitive to changes in credit markets.
- The Department of Motor Vehicles’ monthly registration data are more timely than other key indicators of state-level consumer spending.
- In light of recently announced tariffs, some readers might have a heightened interest in car purchases specifically.
…But Has Some Limitations. Although car registrations might be of interest for reasons noted above, they do not appear to be a reliable proxy for broader measures of consumer spending. As shown in Figure 2 below, car registrations tracked inflation-adjusted (“real”) taxable sales quite closely from 1990 to 2006. Since the 2007-2009 Great Recession, however, the two indicators have moved rather differently. This divergence has been especially pronounced over the last couple of years, as car registrations have grown while real taxable sales have declined.