Cox Automotive’s Q4 2025 Industry Insights and 2026 Forecast Call delivered a blunt message for dealers heading into 2026: the market is stabilizing, but affordability remains the main constraint — and pricing isn’t going back to pre-pandemic norms.
Cox said the broader U.S. economy continues to show “mildly positive” fundamentals, even as consumer sentiment reflects the lingering pain of cumulative inflation. It also flagged a “K-shaped” divide between higher-income strength and lower-income strain. (It’s a theme that continues to shape new-vehicle demand and product mix.)
Key economic signals highlighted in the presentation included real GDP growth forecasts of 3.6 per cent (Q3 2025) and plus-1.0 per cent (Q4 2025), along with a U3 unemployment rate of 4.6 per cent in November 2025. Cox also noted rising borrowing costs, with the average new-auto loan rate at 9.01 per cent in November 2025 and 9.31 per cent in December month-to-date.
On the retail side, Cox pegged the average new-vehicle transaction price at $49,814, with incentives at 6.7 per cent of ATP, stabilizing below the historical “8 per cent-plus” levels that previously helped keep prices lower.
Its Vehicle Affordability Index also showed buyers needed 36.3 weeks of average household income to purchase a new vehicle in November 2025, down from the peak of 42.2 weeks in December 2022, but still elevated versus pre-pandemic norms.
Even though the data is U.S.-based, the same playbook applies to Canadian dealers: higher rates and high transaction prices keep payment sensitivity front and centre. Dealers should expect continued demand skew toward higher-income buyers, more payment-driven negotiations, and a need to stay disciplined on used pricing, F&I penetration and inventory mix.
