On the Dash:
- A prolonged Iran conflict could increase inflation, disrupt supply chains and weaken consumer confidence.
- U.S. auto sales forecasts for 2026 remain steady despite growing geopolitical uncertainty.
- Lease maturities and demand for certified pre-owned vehicles are expected to support market stability.
The longer the Iran conflict continues, the greater the risk to U.S. auto sales and the broader economy, industry economists said last week, even as 2026 sales forecasts remain largely unchanged.
Speaking at the New York Auto Forum, Patrick Manzi, chief economist for the National Automobile Dealers Association (NADA), said uncertainty tied to the conflict could take time to fully impact the market.
Those effects extend beyond rising energy prices. Manzi said the conflict could disrupt global supply chains, tighten credit conditions, and weigh on consumer confidence, all of which are critical to vehicle demand.
Indirect pressures are also building, with higher global costs for goods such as fertilizer, which could push food prices up and heighten inflation concerns. If the conflict persists, Manzi said, inflation is likely to accelerate again across multiple categories.
Despite those risks, industry forecasts for 2026 remain steady. J.D. Power is maintaining its U.S. light-vehicle sales outlook at 16.3 million units, unchanged from projections issued earlier this year and roughly in line with 2025 totals.
Cox Automotive is also holding its forecast at 15.8 million units, reinforcing expectations that demand will remain resilient even as geopolitical tensions persist.
Still, the Iran conflict represents a considerable wildcard for the industry, adding to an already challenging environment. High vehicle prices, elevated interest rates, and rising insurance, repair, and maintenance costs continue to pressure consumers. Weaker consumer confidence and tighter conditions for subprime borrowers also remain concerns.
At the same time, several factors are expected to support the market in 2026. One of the most significant is a projected increase in lease maturities. Auto lenders expect about 2.4 million leases to come due in 2026, up from 1.9 million in 2025. That influx is expected to boost the supply of certified pre-owned vehicles, a key profit center for dealers.
Lease returns also tend to drive repeat business. Customers coming off leases are more likely to lease again, which could help increase lease penetration rates next year. In addition, lease payments have not risen as sharply as loan payments in recent years, easing the transition for returning customers.
Moreover, dealer profitability, while down from recent highs, remains strong by historical standards. J.D. Power estimates average new-vehicle profit per unit, including finance and insurance, was about $6,100 in the first quarter. That compares with $6,800 a year earlier and $7,300 in the same period of 2024.
