A U.S. war against Iran and an ensuing spike in gasoline prices have – so far – been hardly a bump in auto sales.
Cox Automotive's Mid-Year Review released Wednesday changed little in its quarterly forecast for 2026 from three months earlier:
- The biggest change was that its expectation for new cars sold at retail in 2026 was revised downward from 13.1 million in March to 12.9 million Wednesday, which represented a 3.4% drop from 2025.
- Total new car sales are still expected to fall 2.9% to 15.8 million vehicles this year as Cox Automotive made up for lower retail sales by increasing its forecast for fleet sales.
- Used car sales were revised upward slightly from 38.3 million in the March forecast to 38.4 million Wednesday, a drop of 0.6% from 2025.
- Used cars sold by dealers are still expected to fall 0.5% to 20.4 million.
Senior Economist Charlie Chesbrough said Cox Automotive expects the seasonally adjusted annual rate (SAAR) of new car sales in June to be 16.1 million – not much different than March, April and May. Each of those months was fully after the U.S. and Israel launched a war on Iran Feb. 28.
"Although there is a tremendous amount of economic and policy uncertainty these days, the new vehicle market seems to be relatively unfazed," Chesbrough said in a script issued with the release. "It seems that, thus far, vehicle buyers have shrugged off the latest shock – the Iran War gas prices – as sales have been fairly stable the last few months."
Cox Automotive has been predicting drops in new and used car sales this year, in part because of the loss of federal electric vehicle subsidies, high interest rates and high vehicle prices. For wealthier buyers, those constraints have been softened by gains in their stock portfolios.
If those trends continue, Chesbrough said new car sales at a monthly rate of just under or over 16 million "seems the likely path forward for the rest of 2026 – or until the next policy shock changes the course."
Deputy Chief Economist Mark Strand said the used car market also seems unfazed by turbulence in other arenas. Strand said used car sales have softened this year and through May were down 2% from the first five months of 2025, when sales were "juiced by tariff pull ahead."
"When you combine the tough comp versus the tariff driven market frenzy with an energy shock, rising inflation and ongoing general affordability pressures, the small decline in used sales pace looks like relative strength and resilience."
So, has the spike in gasoline prices goosed electric vehicle sales?
The answer doesn't seem so clear. Comments from Stephanie Valdez Streaty, director of industry insights, indicated that Trump has had a bigger impact on the market by ending incentives on electric vehicles last year than by starting a war on Iran this year.
The looming end of incentives led consumers to buy electric vehicles in 2025, many of which might have been bought in 2026. The numbers on EV sales so far this year showed a pattern of sales being down from year-ago levels. It also showed a pattern of EV sales rising from the first quarter to the second quarter – but then all car sales typically rise from the first quarter to the peak second quarter.
Cox Automotive said it expects about 244,000 new EVs will be sold in the three months ending June 30, up 13% from first-quarter sales, but down 22% from last year's second quarter. It said EVs are expected to account for about 5.9% of new car sales in the second quarter, about two points lower than a year ago.
"On the used side, the growth story is much stronger," Streaty said.
Cox Automotive forecast 128,000 used EV sales in the second quarter, up 28% both from the first quarter and from 2025's second quarter. Share is expected to be 2.8% for the second quarter, Cox said.
Used EV sales have nearly tripled since early 2023 fed by a growing pool of off-lease vehicles at prices attracting buyers.
Overall, hybrid vehicles have been selling better than battery electric vehicles.
"Hybrid is no longer a bridge technology, it's becoming a core volume strategy," Streaty said.
In Cox Automotive's May 2026 consumer survey, 56% of in-market shoppers said rising gas prices made them more likely to consider buying a hybrid or plug-in hybrid.
"Hybrids are gaining because they meet consumers where they are, offering efficiency improvements without requiring behavioral change," she said. "And that growth is becoming more broad-based. Toyota and Honda still lead, but Hyundai, Kia and Subaru are expanding rapidly, signaling a widening competitive field."
Contact Jim DuPlessis at Jim.DuPlessis@arc-network.com.
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