14. Honda Pilot four-door 2WD
Car sales will dip next year because 2026 was better than expected and more drivers are being priced out of the market, Cox Automotive reported Wednesday.
For credit unions the trend has been even worse as they lose share of the limited market to banks and other financing providers.
In its annual December forecast for the coming year, Cox Automotive said it expects 15.9 million new cars and light trucks in 2026, down 2.8% from 16.3 million in 2025. It said it expects dealers will sell 13.1 million new cars next year, down 2.8% from 13.3 million in 2025.
For used cars, Cox Automotive said it expects 38.3 million vehicles to be sold in 2026, down 0.9% from 38.6 million in 2025. It said it expects dealers will sell 20.3 million of them, down 0.7% from 20.4 million in 2025.
Lower sales next year were in part the result of better-than-expected sales in 2025, which Cox Automotive revised upward slightly from its September forecast.
In addition, Executive Analyst Erin Keating said the pandemic left a “structural shift" in the market as higher prices led more and more low- and middle-income households to either shift to older used cars or keep patching the ones they’re driving.
From 2012 to 2019, the average transaction price on new cars rose at an average annual rate of 3.2%, tracking inflation and vehicle enhancements.
“But then everything went haywire between 2020 and 2022 when the average annual increase was more than 9%, nearly tripled the historical norm,” Keating said.
Those high prices have persisted, while incentives have diminished.
Historically, incentives were about 9% before the pandemic, allowing the industry to keep vehicles affordable and maintain an annual volume of 17 million vehicles for five years in a row.
But then during the pandemic, incentives collapsed to 2.1%. While they’ve since risen to 6.7%, they’re still below the 2019 peak of 10.8%.
In November 2019, it took the average household 33.7 weeks of their income to buy the average new vehicle. In December 2022 it took 42.2 weeks, and now has receded to 36.3 weeks.
“On the surface, affordability looks like it's mostly recovered. But here's what has changed. Financing costs have more than doubled as a share of household income,” Keating said.
“We've achieved manageable monthly payments through term extension,” she said. “Households aren't paying less, they're paying longer.”
The result has been a market trending toward wealthier buyers, which was reflected in trends of a higher portion of sales going for big crossovers and SUVs.
“The people who can still afford new vehicles are buying what they want, larger premium vehicles,” she said. “Everyone else, they didn't downgrade to a compact car. They left the new market entirely buying either used or hanging onto what they've got.”
And Keating said those trends are leading dealers to believe the current high-price market might support only 15 million to 16 million in new vehicle sales each year.
Contact Jim DuPlessis at JDuPlessis@cutimes.com.
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