The North American auto market is expected to cool in 2026, with most key metrics edging lower after a stronger-than-anticipated 2025, according to Cox Automotive’s latest industry outlook.
The company projects U.S. new-vehicle sales will reach 15.8 million units in 2026, down 2.4 per cent year over year, reflecting what it describes as a “slowing market, but still a good one.” Retail sales are forecast to decline 1.5 per cent, while fleet volumes are expected to fall more sharply, dropping 6.1 per cent compared with 2025 levels.
The outlook highlights a market increasingly shaped by divergence among consumers. Higher-income households are expected to continue driving demand, supported by wealth gains and easing borrowing costs. At the same time, lower-income consumers remain constrained by affordability pressures, including elevated vehicle prices and lingering inflation.
This “bifurcated” consumer environment is expected to accelerate trade-down behaviour and place greater emphasis on value across both new and used vehicle segments.
Electric vehicle demand is also entering a transitional phase. Dealer sentiment toward EV sales has weakened, with expectations remaining subdued following the rollback of incentives and growing supply in the used market.
Other factors shaping the outlook include policy uncertainty, potential tariff changes and evolving fuel economy regulations, all of which are expected to introduce volatility into the market.
Despite these headwinds, Cox points to some near-term support. Lower interest rates and stronger tax refunds are expected to provide a lift to demand, particularly in the first half of the year.
Overall, the forecast suggests a market that remains resilient but increasingly uneven, requiring closer attention to pricing, inventory and consumer segmentation.
