On the Dash:
- Affordability pressures remain the biggest challenge for showroom traffic and closing rates.
- Hybrids and ICE vehicles continue outperforming EVs as consumers prioritize value and practicality.
- Leasing is becoming increasingly important as buyers search for lower monthly payments.
J.D. Power and GlobalData expect U.S. auto sales to remain relatively stable in 2026 as consumers continue to purchase new vehicles despite affordability challenges, elevated interest rates, and weakening electric vehicle demand.
The firms maintained their 2026 U.S. light-vehicle sales forecast at 16.3 million units, signaling continued resilience across the retail market even as economic pressures weigh on consumers.
Analysts said consumer demand remains steady despite uncertainty surrounding fuel prices, trade policy and borrowing costs. Retail and total sales early this year trailed year-ago levels, though analysts noted comparisons remain difficult after unusually strong demand in 2025 fueled by tariff-related pull-ahead buying.
Affordability continues to pressure buyers across the market. Average monthly finance payments climbed to record levels in 2026 as transaction prices remained elevated. J.D. Power also reported increasing levels of negative equity among trade-in customers, further complicating purchasing decisions for consumers carrying over existing debt.
At the same time, leasing activity increased as more shoppers looked for lower monthly payment options. Analysts said the shift reflects growing consumer sensitivity to financing costs and vehicle pricing.
EV demand fell compared with prior-year levels following reductions in incentives and continued pricing pressure. As EV momentum slowed, hybrid and internal combustion vehicles gained market share, reflecting stronger consumer demand for lower-cost and more familiar vehicle options.
Automakers modestly increased incentive spending during the year, although discount levels remain below historical averages. Analysts expect overall industry sales activity to improve during traditionally stronger selling periods later in the year.
J.D. Power said the industry continues to adapt to shifting trade policy, fuel prices, and changing consumer preferences as automakers and dealers navigate an increasingly complex retail environment.
