Q1 2026: New Sales Soften as Consumers Change Lanes

Affordability remains strained as we move through 2026, and surging gas prices (which hit $4 a gallon in March for the first time since 2022) are only adding more fuel to this trend. Q1 market dynamics show the results of this pressure: new vehicle sales softened while used demand jumped, market days supply (MDS) for new cars climbed to levels we haven't seen in half a decade, and interest in fuel-efficient alternatives grew along with the cost of gas.

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New sales off to a softer start

New MDS reached 72.6 in March, up from 65.9 a year earlier and well above the 27.4 days we saw in March 2022 when lots were stripped bare by the chip shortage. Supply has stabilized, but vehicles are sitting longer, particularly at higher price points. Sub-$30k vehicles carry an MDS of 63.2, while the $70k-80k band sits at 87.7. Buyers still want affordable vehicles; there just aren't enough of them.

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Five years ago, vehicles listed under $30k made up over 30% of new inventory. That share has dropped to about 13% today, a 60% decline from 2021, and another 4% decline year-over-year (YoY). The lack of affordable selection is making its mark on new car sales demand. Vehicles under $40k accounted for roughly 95% of the total new sales decline in Q1. Only three buckets posted YoY growth, and none cracked 2%: $40k–50k (+0.3%), $60k–70k (+0.8%), and $80k+ (+1.6%).

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There are bright spots in the new car supply story. Hybrids carry the tightest supply at 46.8 days, well below gas at 74.7, BEVs at 85.3 and PHEVs at 97.7. Toyota holds several of the lowest MDS spots by model: Grand Highlander, Sienna, RAV4, and Corolla Cross all sit under 20 days of supply, with Corolla at 23.6. On the other end, the Dodge Charger carries 829 days of supply. VW ID.4 (449), Chevy Blazer EV (304), and Chevy Bolt (285) round out the highest.

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A look at new car supply by state shows how demand is shaping up across the US. West Virginia sits at an MDS of 57.6 days, California at 59.7 days, while Hawaii tops the list at 105.4. A vehicle that takes over 3 months to move in Montana could sell in about 2 months in California.

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Consumers change lanes to used

With new vehicles increasingly out of reach for many buyers, the data suggests a migration to used. Sales of nearly new used vehicles (2 years old or younger) jumped nearly 24% YoY in Q1, powering the bulk of the used market's growth.

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Median list prices explain why. With the median price of a 1-year-old or younger model at $32.5k and $29.9k for 2-year-olds, prices come with meaningful savings over new, with the bonus of depreciation being baked in.

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The top nearly new models seeing the largest sales growth were priced around the $20k mark. Chevy Trax led at +267% YoY with an average list price of $21k. Jeep Compass (+268%, $23.1k), Kia K4 (+4,868% off a small base, $20.1k), Toyota Corolla (+86%, $21k), and Nissan Sentra (+125%, $19k) filled out the top five. Average days to turn for these models ranged from 25 to 38 days, showing the strong demand.

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Older used vehicles are also contributing. Sales of 8-10-year-old models grew 4% YoY (11% share of change), and 11-plus-year-old vehicles posted 7% growth (22% share of change). The two-speed used market we flagged last year persists: nearly new for buyers who can stretch budgets, and high-mileage older inventory for buyers who need to stay closer to $10k.

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Gas prices lift EV interest

Gas prices rose by over a dollar per gallon in March, reaching their highest levels since 2022. That price shock has rippled through consumer behavior quickly.

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On CarGurus, new EV share of views climbed from 3.4% on March 1 to 4.5% by March 31. Hybrid views rose from 11.9% to 13.8% over the same stretch. Combined, clean powertrain views neared 20% of all new listing views by late March. On the used side, EV views went from 2.9% to 4.0% and hybrid views from 3.7% to 4.3%. That used EV number is notable: EVs make up only about 2.2% of used inventory, so a 4% share suggests interest is running well ahead of supply.

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The interesting wrinkle: EV views have tracked gas prices closely, but hybrid views have lagged. Tight hybrid supply is the likely culprit. With new hybrid MDS at just 47 days (the lowest of any powertrain), there simply aren't enough listings to absorb the interest. That supply constraint could limit hybrid sales growth even as the demand signal strengthens.

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New BEV and PHEV sales remained negative YoY through Q1, a hangover from the loss of federal tax credits in late 2025. On the used side, the picture is brighter for EVs. Used EV demand has remained positive despite the credit expiration, with gas prices providing a tailwind. Tesla Model Y ($30.1k average price), Hyundai Ioniq 5 (averaging $25.5k), and Chevy Equinox EV (at an average $26.2k) led the sales growth among used EV models in Q1.

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Consumers' fuel-efficient options are substantially wider than they were during the last gas price surge. New BEV listings are up 163% from 2022. Used BEV listings have grown 276% over the same period. The inventory exists; the question is whether pricing, range confidence, and running costs align to convert browsing into buying.

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What to watch in Q2

The tension between new vehicle pricing and consumer budgets doesn't appear to be easing, for now. If new sales continue to soften and OEMs don't pull back on production, MDS could push higher. On the used side, the mix of age and mileage on lots may shift further toward older, higher-mileage stock as the nearly new pipeline eventually thins.

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Gas prices are the variable to monitor on the powertrain front. If they hold above $4, the EV and hybrid interest we saw in March could become a sustained trend rather than a blip. A growing wave of off-lease EVs could add another dimension as more affordable used EV supply hits the market at the same time gas prices are pushing buyers to consider alternatives. 

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For dealers, the actionable read is layered. On the new side, affordable inventory that does exist should continue to move relatively fast, along with low supply hybrids. On the used side, nearly new vehicles are the growth engine right now, but reconditioning margins on older inventory likely remain healthy for dealers who execute well. And for any dealer not yet stocking used EVs: the demand signal appears to be getting louder.