As a continuation of our market recap and outlook, we're diving into the key trends we're tracking for the year ahead, along with a sales outlook for new, used, and clean powertrain vehicles.

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What to watch in 2026

Tariff pass-through: do prices finally move? - In 2025, OEMs and dealers largely held the line on pricing even with tariffs in the mix. With several trade agreements advancing and USMCA renegotiation approaching, some tariff pressure could ease in 2026.

The bigger unknown is how much cost automakers will choose to pass through:

• If sticker and transaction prices move higher, especially above $50k, new-vehicle demand in the upper bands could soften, pushing more shoppers toward used vehicles.
• If OEMs keep prioritizing volume and share, the market could see another year of relatively stable prices, with affordability gains driven more by incentives and mix than base MSRPs.

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Rates, insurance, and the stubborn monthly payment - The outlook for rate cuts remains uncertain heading into 2026. Concerns about inflation and U.S. debt levels may keep long-term treasury yields, and therefore auto loan rates, elevated even if the Fed nudges short-term rates lower.

Layer on insurance costs that are still well above pre-pandemic norms, and the picture for monthly payments is murky:

• Payment-driven buyers are likely to keep strict budget caps.
• Cross-shopping across new, used, ICE, EV, and hybrid options will remain intense as shoppers look for the lowest all-in cost, not just the best discount.

Until total cost of ownership moderates, affordability will stay as a filter on every purchase decision.

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Late-model used supply: the start of a reset - As the market moves further away from the chip shortage years, more 3-4 year old vehicles should start returning as lease maturities and trade-ins. The key question is how quickly that shows up on dealer lots.

A meaningful rebound in late-model supply would give shoppers more “like-new” options, ease pressure on older segments that have been doing the heavy lifting on affordability, and could soften used pricing, particularly in the 3-5 year old range. But a full return to historical patterns will likely take several years. 2026 is more likely to be the beginning of normalization than the end point.

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EV demand without a safety net - With federal tax credits gone, 2026 will provide the clearest look yet at the “natural” rate of EV demand:

EV growth is expected to slow as the market adjusts to a landscape without broad tax credits, shifting more momentum toward hybrids. Hybrids continue to gain share as a practical middle ground between ICE and full EVs, appealing to shoppers who want efficiency without range tradeoffs. At the same time, used EVs have room to expand from a smaller base and increasingly offer some of the strongest value per dollar in today’s market.

For dealers, the 2026 playbook likely involves leaning into hybrids as high-velocity inventory, treating used EVs as a distinct value story, and staying flexible on new EV stocking levels until the post-incentive baseline becomes clear.

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Sales Outlook 

New and used sales are expected to move in different directions in 2026. After a pull-ahead boost in 2025, new-vehicle sales are expected to flatten around 16 million, with potential downside if OEMs pass more tariff costs through to consumers. Used volumes are projected to climb toward roughly 39 million, edging back toward pre-COVID levels as more late-model vehicles cycle into the market and shoppers stay focused on value. The used side could see additional upside if higher new-car prices push more buyers to cross-shop older inventory.

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On clean vehicles, hybrids are the clear winner in the forecast. The share of new hybrid sales continues to rise into the mid-teens by 2026, while new EV share declines after the expiration of EV tax credits and price sensitivity increases. In the used market, both hybrids and EVs gain share from a small base, with used EVs showing the most upside as more inventory returns and pricing undercuts comparable gas models.

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