The outlook: 2025 was a good year for most automakers—but 2026 could bring more challenges as consumers grapple with high prices and economic uncertainty.

• Cox Automotive expects auto sales to fall to 15.8 million units this year, down 2.4% YoY.
• Edmunds also forecast a slight dip, from 16.3 million cars sold in 2025 to 16 million this year.

The big picture: The auto market was more resilient than expected in 2025, supported by consumers’ move to purchase vehicles ahead of planned tariffs, and automakers’ efforts to absorb tariff costs in the short term.

• Ford reported its best year since 2019, with total sales rising 6% YoY and market share ticking up 0.6 percentage points to 13.2%. Fellow Big Three automaker General Motors posted a 5.5% increase, while Stellantis’ Jeep brand grew annual sales for the first time since 2018.
• Toyota, Hyundai, and Kia also notched strong gains, with the latter two delivering their third consecutive years of record sales.

However, that momentum could be difficult to maintain in 2026 as tariffs and other costs put upward pressure on pricing, compounding the auto industry’s affordability problem.

• Monthly payments for new vehicles climbed to a record $772 in Q4, according to Edmunds. The number of buyers with monthly payments of at least $1,000 reached an all-time high, accounting for 20.3% of all financed new-vehicle purchases in the quarter.
• As with many other retail sectors, higher-income consumers are driving demand. Households with annual incomes of $150,000 or more account for 43% of new car sales, while those making less than $75,000 are responsible for about 25%, per Cox. In prepandemic 2019, that dynamic was more equal, with both lower- and higher-income consumers accounting for roughly one-third of sales.

Our take: The auto industry faces more uncertainty in 2026 as tariffs, depressed sentiment, and affordability challenges reshape demand. To grow in this environment, companies will need to meet the needs of both higher-income consumers—who are gravitating toward larger, feature-heavy vehicles—as well as lower-income households, for whom the ability to afford higher monthly payments is the driving concern in buying decisions.

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