Salesperson selling cars at car dealership.
Americans are likely to continue buying cars at a healthy pace next year, but prices are likely to rise as much as 8%, a Cox Automotive economist said Tuesday.
Chief Economist Jonathan Smoke said slowing in sales is likely in the final three months of this year with the expiration of incentives for electric vehicles and the continuing weight of tariffs.
Retail sales of used cars in September were 2% lower than a year ago. New cars fared better. They sold at a seasonally adjusted annual rate of 16.4 million in September, up from 15.8 million a year earlier.
Cox analysts predicted spring sales will be boosted by income tax rebates that are expected to rise by as much as $750, putting a record $4,050 back into consumer’s pockets.
“The economic outlook for 2026 has been improving as lower taxes and less regulation create more tailwinds than headwinds,” Smoke said during a webinar to present its Manheim Used Vehicle Value Index. “Thus far, the consumer has been resilient in keeping the economy in growth mode and that has been especially true thus far this year for retail vehicle sales.”
Consumer demand will be limited by the weak job market, but Smoke said it will also be sustained by “substantial pent-up demand from nearly five years of constrained new vehicle production.”
But then tariffs add about $5,500 in costs to the average imported vehicle and adding about $1,000 to the cost of U.S.-assembled vehicles through tariffs on parts.
Smoke said Americans are “likely to see a 4% to 6% increase in prices and maybe even 8% in inflation” in sticker prices by next fall, up from about 3% per year before the pandemic.
The higher prices will change “auto market dynamics and buyer psychology that’s been in place since 2022,” Smoke said.
Contact Jim DuPlessis at JDuPlessis@cutimes.com.
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