US Auto Sales Expected to Slip in Q1 2026

Economic uncertainty, high costs, and EV incentive cuts contribute to projected 6.5% decline.

Apr. 1, 2026 at 10:35am

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New vehicle sales in the U.S. are expected to fall in the first quarter of 2026, as economic uncertainty, high borrowing costs, and vehicle prices keep buyers on the sidelines. Industry experts at Cox Automotive predict a 6.5% drop in Q1 sales compared to a year earlier, with annual sales projected to decline 2.6% overall.

Why it matters

The projected sales slump is attributed to a combination of factors, including the loss of federal EV tax credits, ongoing elevated interest rates, and rising vehicle prices. High fuel costs from the U.S.-Iran conflict also pose a risk to consumer spending, though the impact has been limited so far.

The details

While higher fuel prices typically boost interest in electric vehicles, analysts say overall EV demand could be hit if car prices remain high. Cox Automotive expects EV sales to fall about 28% in the first quarter. Despite the challenges, some automakers like Chevrolet remain optimistic, citing reasons for optimism throughout the year. At dealerships, rising inventory levels are driving more competition, which could benefit buyers looking for better deals.

  • Cox Automotive expects first-quarter 2026 sales to drop 6.5% from a year earlier.
  • Annual 2026 sales are projected to decline 2.6%.

The players

Cox Automotive

An automotive industry research and consulting firm that provides sales forecasts and analysis.

Charlie Chesbrough

Senior economist at Cox Automotive.

Scott Bell

Vice president, global, at carmaker Chevrolet.

Erin Keating

Senior director of economy and industry insights at Cox Automotive.

Jason Hoff

CEO of Mercedes-Benz North America.

Jim Walen

A Stellantis and Hyundai dealer in Seattle.

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What they’re saying

“The loss of EV tax credits, coupled with ongoing elevated interest rates and vehicle prices will lead to a slower pace.”

— Charlie Chesbrough, Senior economist at Cox Automotive

“High fuel prices are typically things that will create disruptions. But so far, we haven't seen anything drastic in that regard. I'd hate to be a pessimist here, at this point, I feel there's a lot of reasons to be optimistic for the year for us.”

— Scott Bell, Vice president, global, at Chevrolet

“Pure EV shopping interest has climbed to its highest point so far in 2026. We've had peaks before, so while this trend is encouraging, we're not in uncharted territory.”

— Erin Keating, Senior director of economy and industry insights at Cox Automotive

“When you have more vehicles than you have customers, it is going to be very competitive.”

— Jason Hoff, CEO of Mercedes-Benz North America

“Expect flat sales this year as consumer sentiment weakens, even as automakers push for growth, potentially leading to higher discounts.”

— Jim Walen, Stellantis and Hyundai dealer in Seattle

What’s next

Analysts will continue to monitor consumer demand and automaker production levels throughout the year to gauge the full impact of the economic factors on the US auto market.

The takeaway

The projected sales decline in the first quarter of 2026 highlights the challenges facing the US auto industry, including affordability concerns, high borrowing costs, and the loss of key EV incentives. Automakers and dealers will need to adapt their strategies to attract buyers in this uncertain economic environment.