October data show the new and used car markets heading in different directions, with new-vehicle sales moderating while used sales maintain momentum. New inventory continued to build and days supply increased as retail sales were flat from September levels. Much of this recalibration can be tied to the pullback in EV demand as the loss of EV tax credits reshaped the new-vehicle landscape. The used market, on the other hand, followed typical seasonal trends and remains on pace for its strongest year since 2021.

EV Market Faces Post-Credit Headwinds

The expiration of the federal EV tax credit reset demand dynamics in October and gave us a cloudier read on EV retail performance without a tax credit tailwind.

New EV retail demand fell roughly 61% month-over-month (MoM) and 35% year-over-year (YoY), reflecting a sharp adjustment after the September rush to capture available incentives. In the used EV segment, sales of vehicles priced under the $25k tax credit qualifying limit dropped 50% MoM but is up 7% YoY. Interestingly, used EVs priced above $25k slipped only 16% MoM, highlighting how much demand was pulled forward into the third quarter and suggesting that underlying interest may be more stable than October’s headline figures imply.

New Vehicle Market Faces An Uncertain Holiday Stretch

New inventory rose again in October, expanding selection for shoppers. Average list prices edged lower as fresh listings entered the market, and days on market improved compared with September. Retail demand remained flat MoM, with EVs contributing to the slowdown following the September 30 tax credit expiration.

Although inventory is heading higher and nearing last year’s peak, supply remains a key factor to watch heading into the holidays. Late October reports of selective production stoppages tied to semiconductor availability have the potential to blunt supply growth. While this currently does not resemble the 2021-style crunch, a prolonged disruption could slow the pace of inventory gains.

Used Vehicle Market Shows Continued Resilience

As the new market faces some recalibration, used is starting the fourth quarter in a healthy position. Used sales cooled seasonally in October and days on market lengthened slightly, but overall demand is up more than 6% YoY, contributing to the highest level for October since 2021. Buyers are benefiting from more options across both franchise and independent lots as inventory sits at multi-year highs and seasonal price trends have contributed to modest MoM declines. Even with this seasonal softening, the used market remains structurally strong, supported by shoppers looking for more affordable alternatives to new vehicles.