The U.S. car market is heading into a tougher stretch. Cox Automotive forecasts new-vehicle sales of about 15.8 million units in 2026, down roughly 3% from 2025, while Edmunds expects a pace near 16 million on a SAAR basis — the seasonally adjusted annual rate, a standard gauge that translates recent monthly sales into a full-year pace. The headline decline is modest, but the forces behind it are not, and they all point the same way: cars are getting harder to afford.

Tariffs raise the sticker

Tariffs — taxes on imported goods — have added cost across the industry, hitting both imported vehicles and domestic ones that rely on foreign parts, steel and aluminum. Automakers have flagged large hits to profits and warned the cost lands partly on buyers. Detroit's giants have quantified the exposure in their earnings: General Motors has pointed to billions of dollars in annual tariff costs, with Ford and Stellantis citing hits of their own. Whatever a company absorbs, the rest shows up in prices.

The EV cliff

A second force is the expiration of federal EV tax credits, the subsidies that knocked thousands of dollars off the price of an electric vehicle. With the incentive gone, demand cooled sharply: new EV sales fell about 28% in the first quarter of 2026, and Edmunds expects EVs' share of new sales to slip to around 6% this year from 7.5% in 2025. The segment that was supposed to drive growth is, for now, pulling the other way.

Affordability is the throughline

The deepest problem is simply price. The average new vehicle now sells for close to $49,000, with typical monthly payments pushing toward $750, and financing is expensive: new-car loan rates sit around the mid-single digits and used-car rates run into double digits, per industry trackers. At the bottom of the market, the affordable car is vanishing — by one count only a handful of new models still start under $25,000. As Cox's economists note, what a household can spend on a car is "increasingly shaped by broader household finances," and those budgets are stretched.

Who feels it

A smaller, pricier market squeezes a long value chain — automakers, dealers, parts suppliers and the lenders who finance purchases — in a sector that makes up a meaningful slice of U.S. economic activity. Expect more of what's already visible: manufacturers fighting harder for share, trimming features to hold price points, and leaning on incentives where they can afford to.

The bottom line

This isn't a crash — a few percent off a ~16-million-unit market is a cooling, not a collapse. But the mix is unusual: tariffs and the loss of EV subsidies are pushing prices up at the same moment high rates and stretched budgets are pushing demand down. That combination tends to reshape who buys — toward used vehicles, longer loans and people holding onto their current car longer. The U.S. auto market isn't disappearing; it's getting smaller, older and more expensive, and that shift is the story automakers will be managing for the rest of the year.