US car sales are expected to moderate in 2026 after a surge in 2025, driven by trade announcements and environmental policy changes. According to analysts, the increased sales in 2025 can be attributed to President Donald Trump’s announcements of huge tariff increases early in the year, which led to a noticeable spring surge in sales. Despite the president eventually striking deals that moderated levies, the initial headlines had already spurred sales.
The US auto market saw a 2% increase in sales in 2025, with 16.3 million vehicles sold, according to Edmunds.com. Ford, in particular, had a strong year, with sales of 2.2 million vehicles, up 6% from 2024. However, industry insiders expect a modest pullback in 2026 sales, citing tepid consumer confidence and a slowing job market.
The new car market is heavily impacted by the split-screen nature of the US economy, with wealthier households benefiting from stock market records, while working-class consumers struggle with increased prices. Average transaction prices for new autos have approached $50,000, compared to under $35,000 less than a decade ago. This has made new cars out of reach for lower-income shoppers, with economists describing the US economy as “K-shaped” to reflect the opposite fortunes of these subsets.
One wildcard heading into 2026 is pricing, with automakers facing billions of dollars in added costs from tariffs, but reluctant to pass them on to consumers due to already high retail prices. Instead, carmakers have opted to charge more for delivery costs, reduce incentives, or strip away features that might once have been included. This has led to a phenomenon known as “shrinkflation,” where consumers are getting less value for their money.
The landscape is particularly difficult for first-time buyers, who are being consigned to the used car market due to the lack of affordable new models. With the Trump administration set to negotiate a new version of the USMCA trade agreement with Canada and Mexico later this year, significant tariff changes could potentially impact prices. However, analysts believe that car consumers will be less tuned-in to tariffs in 2026, as the issue becomes less prominent.
Overall, the US auto industry is expected to experience a moderate decline in sales in 2026, as the market adjusts to the new reality of higher prices and changing consumer behavior. As the industry navigates this challenging landscape, it remains to be seen how automakers will balance the need to maintain profitability with the need to make cars more affordable for consumers.
