Critical Shifts:
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The Used Car Supply Gap is Structural: Average used prices have hit $30,166 (up $860 from last year). This isn't a temporary spike; it’s the result of low new-vehicle production during the pandemic finally hitting the secondary market. For you, this means high-quality, late-model inventory will remain scarce and expensive to source, but your current lot value is well-protected.
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Affordability is Creating a "Forced" Used Buyer: New vehicle prices are averaging $45,859, up 2.5%. As new cars become a luxury for higher-income households, middle-class buyers are being pushed into the used market. This expands your potential customer base to include people who previously only bought new but can no longer justify a $45k+ sticker price.
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Trade-In Equity is the Primary Deal-Maker: While interest rates and prices are high, buyers are entering deals with record levels of equity because their current vehicles are worth more. High trade-in values are "softening the blow" of high transaction prices; emphasizing a strong trade-in allowance is currently your most effective tool for closing hesitant buyers.
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Fuel Efficiency is Neutralizing Gas Price Fears: Despite geopolitical tension in the Middle East, buyers are not fleeing to subcompacts. Because 2026-era vehicles are significantly more efficient than the 5-to-10-year-old cars being traded in, the "monthly fuel cost" for a buyer remains stable even when gas prices rise. You don't need to dump your SUV/Truck inventory in a panic over fuel volatility.
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JD Power presented an updated auto industry outlook to kick off the New York International Auto Show. The outlook, which maintains the 2026 forecast JD Power presented earlier this year, projects 16.3 million total new-vehicle sales.
Delivered as part of the annual Automotive Forum, hosted jointly by NADA, JD Power and the New York International Auto Show, the presentation showcased new data and insights tracking the auto industry’s response to geopolitical and macroeconomic volatility, plus the underlying dynamics driving new vehicle sales.
“The global auto industry has evolved significantly over the past few years, proving its agility and resilience in response to market shocks, and this year is no different,” said Thomas King, president, JD Power OEM Solutions. “Importantly, demand for new vehicles remains robust, despite economic uncertainty associated with the current situation in the Middle East and rising fuel prices. While higher fuel prices are unquestionably impacting the finances of American households, the effect they have on new vehicle buyers is being softened by the improved fuel economy available from today’s vehicles compared to vehicles being traded in. Furthermore, the significant rise in new vehicle prices, and the higher household income required to afford them, indicates that today’s new vehicle buyers are less vulnerable to fuel price volatility than in prior periods.
“There is no doubt that the current situation in the Middle East will make things more difficult to predict over the near-term, and the longer-term risks to auto sales are material, but the fundamentals are strong for a solid year in 2026.”
JD Power stated used market strength supports trade-ins. The average used-vehicle price is $30,166, up $860 from a year ago. This reflects the continued low supply of recent model-year used vehicles due to lower new-vehicle production during the pandemic. The ongoing strength of used-vehicle prices continues to assist new-vehicle buyers who have a trade-in.
The auto industry continues to demonstrate increased resilience, supported by more adaptive planning, diversified supply strategies, and improved operational flexibility, according to JD Power. These capabilities have strengthened the industry’s ability to respond effectively to shifting conditions.
Monthly new-vehicle retail sales reached 1,120,601 in March 2026, their highest levels of the year, underscoring strong demand for new vehicles despite concerns around fuel prices and economic uncertainty. While year-over-year comparisons are complicated by the market volatility we saw in 2025 following the introduction of tariffs, the underlying health of consumer demand for new vehicles remains solid.
While demand remains strong, new vehicle affordability is the primary barrier to higher vehicle sales. Average retail transaction prices are expected to rise 2.5% to $45,859 from a year ago. In aggregate, manufacturers’ incentive spend per vehicle is on track to reach $3,325, which is $165 higher than a year ago, suggesting that manufacturers still have more room to incentivize the purchase of new vehicles. Even as fuel prices rise, improved fuel economy in newer vehicles has helped keep monthly fuel costs relatively stable for new vehicle buyers. On a relative basis, fuel cost as a percentage of financed monthly payments for gasoline-powered vehicles remains below levels observed four years ago, indicating that today’s buyers are less vulnerable to fuel price fluctuations.
