2026 is off to a slow start when it comes to U.S. new-vehicle sales.

A J.D. Power forecast puts January retail deliveries down about 4% year-over-year to 908,000 units for a seasonally adjusted annualized rate of 12.7 million, also down some 4%.

However, January, typically being the slowest auto sales month of the year, doesn’t tend to set the tone for the full 12 months, the data provider pointed out. Still, the industry faces challenges in 2026.

“As with every January, winter storms have the potential to create some disruption to sales patterns, but the key factors in assessing January’s performance are the co-mingling of lower [electric vehicle] sales, higher incentives on internal combustion engine … vehicles and ongoing profit pressure from tariffs,” said President of OEM Solutions Thomas King.

Not an insignificant factor in the sales slowdown are lingering high vehicle prices. J.D. Power expects the average transaction price this month to be up 1% year-over-year to $45,880. 

ICE vehicles alone are up by about the same rate to $45,510, while the average transaction price for EVs jumped 18% to $51,981 after the disappearance of manufacturer incentives and the federal tax credit.

Elevated prices helped make up for slowed sales, consumer spending on new vehicles projected to be up nearly 1½ percentage points year-over-year to nearly $40 billion, J.D. Power said. 

Retailer profit per unit is forecast at $2,148, down about 3% year-over-year, though up 11% from December’s holiday rush period. Total retailer profits for the industry are on track to fall about 3% year-over-year this month to $1.9 billion. 

J.D. Power called the full 2026 outlook “relatively positive” despite the early speed bumps.

“Rising lease-return volumes, plus the expectation of lower interest rates present meaningful tailwinds to the industry. More importantly, as OEMs and dealers navigate the evolving economics of EVs, there is likely to be an opportunity to improve affordability of ICE vehicles as production schedules shift towards a more profitable mix of vehicles for both OEMs and dealers.

“Similarly, supply chain changes present the opportunity to partially mitigate tariffs, although tariff-related profit pressure for OEMs will persist throughout the year.” 

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