Critical Shifts:
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The Affordability Wall: Despite strong demand, high prices remain the biggest barrier to sales. With average new-vehicle transaction prices hitting $45,859 (up 2.5%), independent dealers have a massive opportunity to capture budget-conscious buyers by marketing "value-tier" inventory that sits well below this $45k threshold.
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Used Inventory Scarcity & Pricing Power: The average used-vehicle price has climbed to $30,166 (up $860 year-over-year). This is driven by a structural shortage of late-model used cars—a lingering "hangover" from the low new-vehicle production during the pandemic years. Expect high acquisition costs at auction to persist.
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The Negative Equity Time Bomb: Roughly 30.5% of new-vehicle buyers are now trading in cars with negative equity (a 4.2% jump from 2025). These are "peak-shortage" buyers from four years ago returning to a market where they owe more than their cars are worth. Success in 2026 will require creative F&I structures to bury this negative equity.
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The EV Incentive Divide: There is a widening gap in how vehicles are being discounted. While EV incentives are actually dropping (averaging $11,258, down $940 from last year), discounts on traditional gas-powered vehicles are rising (averaging $3,030). Dealers should watch these diverging trends to ensure they aren't overpaying for used EV stock that lacks the aggressive "new car" subsidies of years past.
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Total new-vehicle sales for March 2026, including retail and non-retail transactions, are projected to reach 1,372,877, a 11.4% decrease year-over-year, and a 11.9% increase from February 2026, according to a joint forecast from JD Power and GlobalData.
The seasonally adjusted annualized rate (SAAR) for total new-vehicle sales is expected to be 16.0 million units, down 2.1 million units from March 2025, and up 470,306 units from February 2026.
New vehicle total sales for Q1 2026 are projected to reach 3,655,500 units, a 7.4% decrease from Q1 2025 when adjusting for the number of selling days.
New-vehicle retail sales for March 2026 are projected to reach 1,120,601, a 13.3% decrease from March 2025 and a 14.3% increase from February 2026. Comparing the same sales volume without adjusting for the number of selling days translates to a decrease of 16.6% from 2025.
The seasonally adjusted annualized rate (SAAR) for retail new-vehicle sales is expected to be 13.1 million units, down 2.1 million units from March 2025 and up 391,242 units from February 2026.
“While demand remains strong, new vehicle affordability remains the primary barrier to higher vehicle sales,” Thomas King, president of OEM solutions at JD Power. “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. However, the changes in average discounts are heavily influenced by the decline in EV sales. Discounts on EVs are expected to average $11,258 in March, down $940 compared with March 2025. Meanwhile, discounts on non-EVs are projected at $3,030, an increase of $353 from last year.”
King added that “interest rates and strong used-vehicle values are providing some relief to buyers facing elevated monthly payments. The average interest rate for new-vehicle loans in March is 6.55 percent, a decrease of 36 basis points from a year ago.
“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 average trade-in equity in March is $6,869, down $240 from a year ago but still high from a historical perspective. Still, the number of new-vehicle buyers with negative equity on their trade-in is expected to reach 30.5 percent—an increase of 4.2 percentage points from March 2025 as consumers who purchased during the peak of inventory shortages 4 years ago return to market.”
