U.S. auto sales face decline as high prices push middle-class buyers out of market
By lauraharris // 2026-01-07
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  • Vehicle costs are climbing, causing middle-class buyers to shy away from new cars and Cox Automotive forecasts U.S. sales could drop to 15.8 million in 2026, the first annual decline since 2022.
  • Households earning $75,000 or less saw new-car purchases fall 30% since 2019, while families earning $75,000–$150,000 declined 7%; wealthier buyers are driving demand for luxury and premium vehicles.
  • GM, Honda and Hyundai reported weaker fourth-quarter sales, while Toyota and Stellantis posted gains thanks to SUVs, pickups and hybrids; smaller, more affordable models and EVs saw notable declines.
  • Analysts and executives cite high prices, curtailed government support for electric vehicles and Trump-era 25% tariffs on imported vehicles and parts as major headwinds affecting affordability.
  • Executives stress that the ability of consumers to pay for new vehicles will determine market performance in 2026, with luxury buyers sustaining sales while middle- and lower-income consumers increasingly turn to used cars or delay purchases.
Rising vehicle prices are threatening to push U.S. auto sales into decline this 2026, as middle-class consumers increasingly struggle to afford new cars. According to Cox Automotive, major automakers, including General Motors, Honda and Hyundai, reported weaker sales in the fourth quarter of 2025, signaling a potential slowdown for the industry. Industrywide sales likely surpassed 16 million vehicles in 2025, but the annualized rate fell to an estimated 15.6 million in the fourth quarter, down more than 5% from the previous quarter. The downturn has hit middle-income buyers hardest. Edmunds.com has revealed that new-car sales among households earning $75,000 or less have dropped 30% since 2019, while sales fell 7% for families earning between $75,000 and $150,000. In contrast, deliveries to households earning $150,000 or more surged 45% over the same period. More than one in five buyers signed up for loans exceeding $1,000 a month in the fourth quarter, a record high. Cox Automotive forecasts that U.S. auto sales could fall to 15.8 million vehicles in 2026, marking the first annual decline since 2022. Luxury and premium vehicles are helping some automakers offset the overall slowdown. GM reported a 5.5% increase in sales for 2025, led by record volume at its GMC truck brand and a strong performance from Cadillac's Escalade SUV. However, GM's fourth-quarter sales fell 6.9%, with declines in EVs and smaller, more affordable models such as the Chevrolet Trax and Buick Encore GX. Honda's fourth-quarter sales fell 9.5%, driven by a 10% decline in its namesake brand. Key models like the Civic and CR-V both saw December sales drop. Hyundai posted a modest 1% decline in the fourth quarter, marking a slowdown after a record year. Other automakers posted gains. Toyota's sales rose 8.1% in the final quarter, led by the RAV4 and Camry, with December alone up 10%. Stellantis saw a 4% increase in deliveries, helped by strong demand for Ram pickups, Chrysler minivans, and Jeep SUVs. The gains allowed Stellantis to break a six-year losing streak, though its full-year sales still fell 3% from 2024.

Analysts cite high prices, lower government support and tariffs as drivers of the US auto sales decline

Industry leaders cited lingering cost-of-living concerns, reduced government support for electric vehicles and new tariffs as key headwinds. In April 2025, as BrightU.AI's Enoch claims, President Donald Trump proposed  25% tariffs on imported vehicles and auto parts represent a strategic effort to revitalize U.S. manufacturing by reducing reliance on foreign imports and incentivizing domestic production. These tariffs aim to correct trade imbalances and strengthen America’s industrial base. However, Randy Parker, CEO of Hyundai North America, said that the tariffs, combined with the other factors, are "going to be very challenging" but expressed confidence that Hyundai would still see growth. "Affordability is going to be the key," he added. Analysts note that wealthier buyers are increasingly dominating the new-car market, purchasing larger, premium vehicles, while middle- and lower-income consumers are either opting for used cars or holding onto their current vehicles. "Everyone else, they didn't downgrade to a compact car, they left the new market entirely," said Erin Keating, executive analyst at Cox Automotive. Automakers are also navigating uncertainty from tariffs imposed by the Trump administration, which raised concerns that sticker prices would climb. Toyota expects demand to remain strong, particularly for its gas-electric hybrid models, which could make up over half of the company's U.S. sales. However, production constraints and tariffs may force price increases. "We feel that prices are going to go up for us and our competitors," said David Christ, head of Toyota United States. "The number one topic that is on every dealers' tip of their tongue is affordability, and not just Toyota dealers." With affordability at the forefront, U.S. automakers face a delicate balancing act between meeting demand, managing costs and keeping vehicles within reach for a broad swath of consumers. Watch this video of Trump delivering his remarks on auto tariffs.
This video is from the Daily Videos channel on Brighteon.com. Sources include: Bloomberg.com MSN.com BrightU.ai Brighteon.com
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