A new outlook from Cox Automotive projects that new vehicle sales are expected to slow.
A new outlook from Cox Auto motive projects that new vehicle sales are expected to slow slightly in 2026 from last year, which surpassed expectations for the industry.Cox Auto motive forecasted that the U.
S. will see 15.8 million new vehicles sold in 2026, which represents a 2.4% decline from sales levels a year ago. It also projects a 1.5% year-over-year decline in retail sales, while fleet sales are expected to fall 6.1% from 2025.Additionally, Cox anticipates a slight year-over-year decline in used retail vehicle sales as affordability pressures continue to drive demand for less expensive vehicles. The group also sees lease penetration among EV and plug-in hybrid vehicles declining 3 percentage points from a year ago. "The fact is, most vehicle sales metrics in 2025 were slightly stronger than many forecast – including us," said Jeremy Robb, interim chief economist at Cox Automotive. "Our 2026 forecast reflects a slowing market, but still a good one."IRS HANDS WORKERS BIGGER TAX BREAK FOR BUSINESS EXPENSES IN 2026"While we're expecting most sales metrics to be lower compared to 2025, the expected declines are modest, and we think there will be good news on interest rates and tax returns that help the auto market in the first half of 2026," Robb added.Cox Automotive's outlook sees several prevailing economic forces which will in some cases help and in others hurt the auto industry in 2026.The firm's analysis noted "bifurcated consumer dynamics" with higher-income households seeing benefits from rising financial markets, tax relief and interest rate cuts that help drive purchases of new vehicles.AMERICANS ARE PUMPING THE BRAKES ON ELECTRIC VEHICLE ADOPTION: 'AFFORDABILITY IS A BIG ISSUE'However, lower-income consumers are expected to continue to face the financial strain of elevated inflation and high purchase costs for new and used vehicles, with the firm explaining the "divergence will accelerate trade-down behavior, making value perception critical across the market."While inflation appears to be slowing and interest rate cuts by the Federal Reserve may improve household wealth, the report noted that "uncertainty surrounding Federal Reserve leadership and independence creates volatility, delaying the housing recovery and limiting auto sales growth."STICKER SHOCK PUSHES SHOPPERS OUT OF NEW-CAR MARKET AS AFFORDABILITY CRISIS DEEPENSCox Automotive also noted the "jobless expansion" occurring in the U.S. economy, with GDP rising on the back of investment and productivity gains even as the labor market has stagnated."Slow job growth will dampen household formation and confidence in big-ticket purchases, including vehicles," the outlook explained. "This weak labor market will be a headwind for the auto market, but stock market gains can be a tailwind."The firm's analysis also noted the impact of uncertainty from policy changes implemented by the Trump administration that affect the auto industry – particularly electric vehicles .GET FOX BUSINESS ON THE GO BY CLICKING HERE"Tariffs, fuel-economy adjustments and tax-code changes will create a complex and dynamic landscape, with the USMCA renegotiation front and center in 2026," Cox analysts wrote. "Meanwhile, the electric vehicles market will enter its next chapter in 2026, without government incentives and off-lease EV models flooding the used market."Find more updates on this story at FOXBusiness.com.
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