Three Trends That Will Shape the U.S. Auto Market in 2026

• New-vehicle sales are expected to reach 16 million in 2026, a steady outlook following a year marked by economic and policy uncertainty.
• Inventory, pricing, and days to turn have largely normalized, signaling a market operating at a more sustainable pace.
• Affordability remains the biggest barrier, even as interest rates begin to ease.
• Shifting consumer behavior and evolving supply dynamics will play an outsized role in shaping the year ahead.

The U.S. new-vehicle market appears to be settling into a sustainable rhythm as we round out 2025 and look ahead to 2026. Our latest forecast projects 16.3 million new-vehicle sales in 2025 and 16 million in 2026. These volumes reflect a market that, despite affordability constraints, policy changes and economic uncertainty, has found a more natural balance in inventory, pricing, and days to turn (DTT). After several years of volatility, both consumers and automakers appear more comfortable operating in this new normal. 

A "K-shaped" divide driven by affordability 

In 2025, affordability emerged as the auto industry's biggest barrier to growth, creating a K-shaped divide between shoppers who can absorb today’s prices and those who can't. Higher-income buyers who remain in the new-car market are still choosing larger, higher-priced vehicles and aren't trading down or making cost-driven compromises. In contrast, many price-sensitive shoppers have been pushed out of the new-vehicle market entirely as elevated monthly payments put ownership out of reach. 

This divide shows up clearly in year-to-date 2025 (January-November) data: 

• The average days to turn for vehicles with an average transaction price (ATP) over $70,000 was 61 days — almost identical to the 60-day pace for vehicles priced below $70,000. 
• Luxury shoppers aren't defecting to lower-priced brands. Loyalty remains high, with 64.2% of luxury owners trading in for another luxury vehicle compared to 65.9% in 2024.  
• Cars accounted for just 17% of the market in 2025, underscoring the continued dominance of SUVs and trucks.
• The once-mighty midsize sedan segment shrank further to just 4.5% share in 2025, down from 5.3% in 2024. 

A sustainable pace supported by real demand

At the same time, the industry is no longer leaning on cheap leases or aggressive fleet sales — the tactics that once helped push U.S. volume above 17 million units. Consumers aren't scoring record-breaking deals, but they're also not paying over MSRP. This balanced environment reinforces that 16 million units is a sustainable level for the coming year, driven by genuine demand rather than temporary levers.

Looking ahead to 2026, a combination of economic headwinds and stabilizing market forces will shape the pace of new-vehicle sales.

Taken together, these dynamics set the stage for three key trends that will shape the new-vehicle market in 2026.

Trend 1: New-vehicle prices will remain elevated but stable

After several years of rapid price escalation, new-vehicle transaction prices have leveled off, and we expect that stability to carry into 2026. Even as shoppers continue to gravitate toward larger vehicles with more technology and comfort features, many consumers are simply priced out of the new-car market. Tariff-related costs could create some upward pressure, but so far the impact has been far more muted than initially expected.

The bright spot heading into 2026 is the easing of interest rates. In November, the average APR on a new-vehicle loan dipped to 6.6% — the lowest point of 2025. That downward pressure on rates should continue into 2026 and could offer some relief on monthly payments, though it may not be meaningful for all buyers since strong credit remains essential for securing favorable terms.

The wild cards for pricing remain the policy environment and the supply chain. Tariffs, elevated material costs and sporadic supplier disruptions are still in the mix, though they've been far less intense than what the industry experienced in 2022. 

Trend 2: EV share will slip in 2026 as incentive-driven shoppers pull back

With the expiration of the federal EV tax credit, we expect EV market share to edge down in 2026. EV share is likely to land around 6%, compared to the 7.5% we anticipate for 2025. The shift reflects a cooling among shoppers who were previously motivated by subsidized lease offers on electric models rather than by the vehicles themselves.

That transition is already visible in the data. EV lease penetration fell to 53% in November, down from 71% in September before the credit expired. While still higher than the industry-wide leasing average, the decline highlights how sensitive the segment has been to payment-driven shoppers. At $712, average new EV monthly payments remain elevated, reflecting higher vehicle prices and pushing many mainstream buyers to the sidelines.

The good news is that there is some relief on the horizon. More affordable models, including the redesigned Nissan Leaf and the return of the Chevy Bolt, will broaden the segment and likely reenergize interest. But while these vehicles will help diversify the EV shopper base, they won't fully replace the deal-seeking buyers who were previously motivated by ultra-low lease payments.

Trend 3: Off-lease inventory will rebound in 2026, offering shoppers affordable used alternatives the 2025 market lacked

After years of lean supply, 2026 will bring a meaningful increase in off-lease vehicles returning to the market. The sharp drop in leasing activity in 2022 left 2025 with unusually thin inventories of lower-mileage, near-new vehicles, limiting affordable choices for many shoppers. As leasing began to recover in 2023, the resulting 2026 lease returns will start to help fill a gap that was especially visible in 2025.

A healthier flow of off-lease returns will give consumers more flexibility — especially those priced out of the new-vehicle market or looking to avoid today's higher monthly payments. 

Edmunds says

The new-vehicle market is settling into a sustainable rhythm, with sales expected to reach 16 million in 2026 as pricing, inventory and days to turn stabilize. But affordability remains the defining force shaping the year ahead. Higher-income shoppers continue to drive demand for larger, higher-priced vehicles, while many price-sensitive buyers are being pushed toward used and off-lease options.

At the same time, key dynamics — from moderating interest rates to shifting EV demand and a long-awaited rebound in off-lease supply — will influence how consumers navigate their choices. Taken together, these trends point to a year of steady sales rather than significant expansion, driven by genuine shopper demand rather than temporary incentives or market distortions.