The State of the Car Buyer in 2026 - Why Buying a Car Still Feels Risky

Hey everyone and welcome back to The Straight Shift and happy New Year!

Here we are in 2026 and if you've been listening to this podcast for a while,

you know that I usually kick off the first episode of a year with my predictions for the coming year.

What we should be looking out for, where the bullshitter is likely to show up next,

and that's absolutely what this episode is. But I wanted to approach it a little bit

differently this year. Instead of talking about all the shiny new models or the optimistic industry

promises, some of which I will get to in later episodes this quarter, I want to start with something

more basic. How car buying actually feels right now? Because I keep hearing the same thing from

so many people. I don't know why, but this still feels so uncomfortable. It's confusing. It's

complicated. It's risky. And that's one of the biggest words that I hear. Like one wrong move

could lock you into a bad decision for years. And while that is always true when it comes to car

buying, if you're not imagining this, it's very true this year and there's some very real reasons

why car buying feels so different now than it did just a few years ago. So understanding that

is how we're going to navigate ourselves into 2026 to be better car buyers. Because right now

everything feels like a gamble. So we need to make some shifts. So let's get into it.

Before I give you my predictions for what's going to happen in the auto industry in 2026 and what

that means to you as a potential car buyer or is just a car owner and driver, we need to take a look

back at 2025 to see what actually happened versus what we thought was going to happen.

We went into 2025 thinking it was going to be a calmer year. Nothing exciting was going to happen.

We were finally starting to get over the inventory problems that came out of the pandemic. We were

starting to see markets stabilize. We were seeing EV adoption take off. It was cooling a little bit,

but we were expecting it to really stabilize. Buying a car was supposed to feel boring again.

And honestly, boring would have been fantastic. Boring means predictable. Predictable means

confidence. And confidence means that people don't have to lie awake wondering if they just

made a five-year financial mistake. And the automotive industry, the dealers, the manufacturers,

they like boring too. They want that confidence so they can plan. They can make strategies. They

can make good financial decisions on their end. That was the plan. Reality, of course, said,

oh, you have a plan. Hold my beer. So what really happened in 2025 was we started a trade war with

the whole rest of the planet. And so tariffs came into the picture and policies and rules kept

shifting. Uncertainty became the word of the year. All those EV incentives that the manufacturers

had banked on to help them overcome all that money that they had invested to develop the technology.

Boom, gone, vanished. And so the automakers were just forced to rewrite their pricing,

their product plans, their whole strategic vision that was already designed and priced and in place.

They had to completely wing it and do a 180. And so everything just got really,

really crazy and uncertain. Some models got more expensive. Other models vanished entirely without

explanation. When the industry plans products for years in advance, which is what happens in

the automotive industry, it's really a five to 10-year planning cycle. Unless you're in China,

they have a shorter one. But when things change direction and they don't change it certainly,

like literally policy was changing with every press conference, that's where things get really,

really messy. And that mess trickles down to buyers. So pricing didn't normalize the way we

expected it to. We were still seeing the huge prices from the pandemic years. Inventory did

improve in some places, but it stayed frustratingly tight in others because we still have supply chain

issues. And the tariff situation has made that so much worse. So we saw product launches delayed,

canceled entirely, reworked. We've seen pricing increases sneak into weird areas,

like the destination charge. If the manufacturer didn't want to increase the MSRP, which most

of them had to do, they tried to bury the tariff costs in things like the destination charge,

which newsflash, that's just part of the MSRP. But it's creative accounting on their part

because they know we were already in an affordability crisis. So with all this uncertainty,

both with buyers who were concerned about their jobs, inflation overall, the cost of everything,

that uncertainty just creates so much panic in the market. So buyers stopped trusting the economy.

They stopped trusting themselves. And so it was like, what's the right moment to buy? Or they backed

off and said, you know what? I'm not buying anything right now. Things are too crazy. And that was

reflected in a significant slowdown in automotive sales in the last quarter of 2025. That's usually

when things were at bump for the holiday sales. They didn't. And so the dealers really have started

to feel it. Now, that's not to say that everything that happened in the auto industry in 2025 was

doom and gloom. Some things happened that will benefit us. The biggest one was that the Fed

dropped interest rates three times, September, October, and then a final one in December. Now,

that didn't magically make cars affordable again, but it did help keep things from getting a lot

worse. Auto loan rates stopped climbing and some payments softened a teeny weeny bit,

but we'll take what we can get. And it didn't happen all at once. The Fed lowers things gradually,

but it takes time for those base rates to then work their way through the rest of the economy and

actually get reflected in car loan prices for car buyers. But what it did do was allow the captive

manufacturing finance companies to offer some lower APRs. We're finally starting to see

some low APRs that actually feel somewhat low. Subaru, for example, had some zero APRs, a couple

other manufacturers did. We're still not to where we were before the pandemic. And honestly, one of

my predictions for 2026s, we're never going to be there again. But we're hoping we will settle into

a new normal and things will stabilize. And the rate cuts will help that. Unfortunately,

new car prices are still up about 22% from where they were pre-pandemic in 2019. But things are

starting to plateau a little bit. And now it's, I think we're kind of over some of the sticker

shock, but now we're experiencing commitment shock. It's, can I afford this? What does my future

look like? I don't want to make a $48,000 purchase if I don't feel certain, if I don't feel

confident. And our trust has been eroded because we've heard way too many times,

oh, this is going to save you money. It's going to bring down prices. Yeah, none of that has happened.

And so that's why our trust has been eroded. Another thing that could potentially be positive

as we go into 2026 is some looser rules, some fewer regulations. There are pros and cons to that,

but we've seen some proposed changes to the fuel economy standards. And that's always been pitched

as an affordability win. Oh, it's going to be cheaper for the manufacturers to produce cars

because they're not going to be required to invest money in all of these fuel saving technologies.

And that's going to get passed on to the consumer. Yeah, the real word math never works out quite

that way. And I'm going to do an episode, maybe the very next episode at the end of this month will

be about the dark side of green energy. Hang on for some more of that in a future episode,

but for now, it's uncertain whether or not that's actually going to save you and me as the average

person any money, but it could bring a little more focus and stability to the industry, which

is still reeling right now. This is why I feel that 2026 is not going to be a full reset. We're

still uneasy. Our confidence is still shaken. And there's still a lot of things that are up in the

air right now. Erefs are still happening and they are under legal review. The Supreme Court is

expected to weigh in on a lot of that this year. They've already said some things, but a lot of the

lawsuits that have been filed are working their way through the system. So our regulatory framework

is still largely shifting. So that's why 2026 is still going to be a let's wait and see what's

happening because we just don't know, especially the first part of the year. And that's going to

up for the manufacturers as more cautious planning, more flexible product strategies.

And we may see some very inconsistent incentives or ones that at least feel inconsistent to us

because the automotive industry is having to do a major, major course correction. The policy changes

this year and the uncertainty of them and the frequency with which they happened really threw

bomb into the middle of the automotive industry. And so if 2025 was driven by chaos and uncertainty,

2026 is going to be driven by attempts at correction and finding stability any way we can.

And for the manufacturers, finding stability means finding their profits. It means making up for the

little billions of dollars that they had to spend last year that they weren't expecting, that they

weren't planning for, and that their shareholders are not very happy about. So expect the industry as

a whole, the manufacturers and therefore their dealers to be looking to hang on to profits

any way they can. So let's talk through what the industry thinks is going to happen in 2026.

And what I think is really going to happen from kind of being boots on the ground

and looking not only at economic data, because remember I've been wearing my economics hat

from my college degree that I never expected to use, been wearing that for several years now.

I don't think it's ever coming off again, but I do look at all the reports, I look at the numbers,

I run my own reports, I look at the trends, but I also talk to obviously my clients,

I talk to you guys as my audience, and I talk to the dealers and I talk to the manufacturers to

see what they're really seeing behind the scenes on the ground and at very specific local levels,

because a lot of these predictions, we look at the economy in a macro sense,

so we look at the whole country or we look at the whole world, and that doesn't always trickle down

directly to what you are going to experience in your local geography, walking onto a car lot,

looking at a very specific make and model. So here we go, my crystal ball has been broken

since before the pandemic, but I do expect, and the industry agrees that the Fed will likely cut

rates further, a lot will be a wait and see because that's actually how the Fed is supposed to operate,

so they're going to be watching inflation and they will cut rates where they feel is necessary

to curb that, and so we can't really rely on it, but I do see them cutting it, I'm hoping at least

one more time, really crossing my fingers for two more times, because what that's going to allow

is some incentives that actually will help the affordability crisis in the automotive industry

a little bit more, it's not going to bring down the price of the car itself, but it can bring down

the cost of buying it, it can bring down those monthly payments a little bit, because the interest

rate really does matter in your monthly payment, it's going to allow the manufacturers to further

come out with those financial incentives, those low APRs, and those can be a win-win because

they directly help consumers through lower payments, but without the manufacturers having to take as

much money out of their own pockets in the form of direct cash rebates off the price of the car,

it's also going to give them the opportunity to start bringing back some better leasing

parameters, leasing once a hell in a hand basket during the pandemic along with everything else,

but with the rates being so high and them not needing the incentive to help sell cars because

the inventory was low, now the math has changed, the supply and demand has changed, we have supply

now in most cases, not necessarily if you're looking for a Toyota hybrid, but in many cases

we have good inventory, so the supply can be there, but now they have the demand problem,

and this is where the power comes more to the consumer, if we're hesitating to make that big

purchase, they need to incentivize us to pull the trigger, and leasing is one way that they can

make cars at least feel more affordable, now you know I will get on my soapbox and talk about how

leasing should not be a financial strategy, it should not be affordability strategy unless it

really fits your lifestyle because of the risks involved, go back and listen to all my old podcasts

about that, my position on that hasn't significantly changed, but we are where we are,

and sometimes we have to make different tactical decisions just to make the math work in our life,

so I'm excited that I think we will see leasing start to make more of a comeback,

we started to see it towards the end of 2025, I hope it will get stronger because

that will allow just like with lowering the APRs that the captive finance companies offer,

they can offer 1.9% or 2.9%, it's the same with leasing because the money factor is leasing's

equivalent of an interest rate, whether we lease a car or we get a loan for a car, either way the

bank has to lend the money on that, and they have to pay to borrow that money to then turn around

and lend it to you, so the Fed lowering rates will allow them to borrow money for cheaper,

therefore we can borrow money for cheaper, and on a lease because you are only financing

a portion of the car, maybe you're financing 50% of the car or 40% of the car, it makes a bigger

difference in keeping that monthly payment low, over the last year we have seen leasing rates

be about the same as regular loan rates, that doesn't make leasing particularly attractive,

if they can get those rates down and funnel them into leasing, and those low low near 0%

equivalent money factors, then we could see leasing be beneficial again, but my prediction

is that we will see more financial incentives from the manufacturers and their captive finance

companies, so look for those special low APRs, and remember you do have to have excellent credit

to qualify for the best ones, but even if your credit is not tier one, it's not 740 or 760 or

higher, maybe it's in the low 700s, the high 600s, there may still be better rates available

through the manufacturer's finance company than going through a traditional bank, so be sure to

ask about that, because those special APRs, they only advertise the absolute lowest ones,

but it's usually a tiered system, so you can still benefit even if your credit is not perfect.

Another thing that the industry is predicting that I don't think will come to any surprise to

anyone, and I 100% agree with it, is that we're going to see a significant slowdown in EV purchases,

not only because of the affordability with the loss of the federal tax credits,

but just people in general are feeling a little more risky about it. It will not subside as much

in your major cities, LA, San Francisco, Atlanta, New York, Chicago, your big cities where you have

such an advantage with electric vehicles, however, the manufacturers, since they have now been

bitten in the butt hard with the loss of those tax credits, because remember, that was what was

giving them a return on their investment into that technology, poof, those are gone,

and so they realized, this is a really risky strategy, so they are backing off their plans

for EVs. It's not to say that we're not going to see more new EV models because they are pot

committed, as we say in poker, to many of them, so the scout line that's coming out, and I'm going

to do a whole podcast on that, we're still going to see them, but the manufacturers are not saying

our entire fleet is going to be electric by 2030. Yeah, they have backpedaled hard on that,

and they're realizing, okay, we need to look at this, how do we hedge our bets? We can't put all

of our eggs in one basket. Financial planners have always said that's a bad idea, and I think the

industry went too hard in that direction, and so now they're like, okay, how can we make more

profitable cars, and hopefully they will start focusing on making more affordable cars.

My prediction is that hybrids are going to continue to be the hottest thing as people back off of EVs,

as the manufacturers back off of EVs, and hopefully invest more in that hybrid technology,

especially for the U.S. market, because that is what is the most practical for a larger number of

people. It's never really a bad idea to buy a hybrid, whether you live in a major city, or if

you live more out in the country in a more rural area. A hybrid will still save you money on gas,

while still getting you where you need to go without worrying about running out of electrons.

So if the manufacturers can focus on hybrid technology, then they can just make more cars

hybrid. This is Toyota's strategy. They're still investing in EV, but their strategy is our entire

fleet will be hybrids. So every time they're redesigning, that redesigned car is just going

to be a hybrid, period. You're not going to get just an old-fashioned gas model anymore.

So the new RAV4 that's coming out later this year, pure hybrid, when they redesign the Camry,

pure hybrid, it's great because now they can achieve the economies of scale by just producing

one drivetrain, not four different drivetrains for the same model.

Yes, it's less choices for us as the consumer, but that also helps us with our decision fatigue

and our confusion, because it can get very overwhelming. Wait, gas version, hybrid version,

plug-in hybrid, EV, do we really need that in one model vehicle? I don't think so.

So if it reduces their manufacturing costs and still gives us good fuel economy and less decision

fatigue, I personally consider that a win-win. My prediction is that hybrids were still going

to be the way to go and we're going to see a lot of the shift that was the hype of EVs go into

investment in hybrids. Manufacturers, if you're listening to this podcast, please just do that.

It makes so much sense all around. It's a win-win. Of course, as consumers, what that means to us

is that don't expect to see killer deals on hybrids. We haven't been seeing them to date,

so that shouldn't be any sort of surprise, but hopefully we'll still see some lower APRs just

to help the affordability crisis, because if we can't afford cars, period, then they're not going

to be able to sell those hybrid models. For example, got a Subaru that came in at the very end of the

year, literally New Year's Eve, happy New Year, a new Subaru Crosstrek hybrid. We got a little bit

of a discount on it because I have a great relationship with Subaru and their dealers,

but we are also going to be able to take advantage of a lower APR, not super low,

but better than what we're seeing in the market. This is a brand new highly anticipated hybrid

that there is a waitlist for. I think that trend will continue into 2026. Look for those

financial incentives. Doesn't necessarily help you if you are planning to pay cash for a car,

but there's where you need to do the math and say, okay, maybe if there's a zero or one percent

APR, maybe I should finance that car and then take my cash and figure out where to put that

to earn me a greater return. That is an excellent question for your financial planner,

which I am not and do not play on TV. This is what I think is going to happen for 2026,

and I want to take a pause here because everything that we have been talking about, fear,

affordability, hesitation, mobility, because we need our cars in this country in most places.

We think about a car as a convenience, as a tool for our daily lives, but for some people,

it's not just that convenience and that tool. It can be the difference between being stuck

in an unsafe place. It truly does represent freedom in this country, which is what we

tend to prize more than anything else. If you have listened to this podcast or followed me for

any amount of time, you know that my mission is empowering women, especially when it comes to

financial decisions, their independence, their ability to make their own choices, and their safety.

Sometimes that empowerment looks like education, like what I do with this podcast,

my online courses, the speaking engagements that I do. Sometimes it looks like confidence,

which often comes from education. Sometimes it shows up in the ways of just someone

needing a way out and helping them find that path. So here's what I want to share with you all,

that's very personal, and I've got a pretty big ask. There is a woman that I know very well.

She has a three-year-old daughter. She is currently in a very unsafe domestic living situation.

I am not going to go into details, and I am not going to name names for safety reasons.

She is disabled and waiting on government assistance, which can take forever, and she

has zero money. She lives so far below the poverty line, she can't even see it, even though she's a

very smart and capable person, and she's a hard worker, but the debt has just been stacked so

against her from the day she was born. It's just one of those situations. But the good news is,

is that she has applied for and been accepted into a low-income housing program in another state that

has better programs, and so she has a real opportunity to start over and build a better life

for her daughter. That is what drives every single decision that she makes and keeps her going.

The hard part of this is the timing. When that door opens, she's on a wait list right now.

When an apartment becomes available in this state, she has to move, and right now,

she can't do that on her own. Her vehicle does not run. It needs a number of repairs.

She's a single mom with a young child. Travelling across multiple states alone

isn't just difficult. It's actually dangerous. They're much more vulnerable on the road,

and just getting out of this situation is dangerous. A woman is never in any more danger

than when she makes the decision to leave an abusive situation. She is literally going to have

to escape with the clothes on her back. With her daughter, they might be able to pack a small bag

of some essentials, but they are literally going to have nothing. They're going to be like refugees,

and they're going to have to start over. I care about this person, and I admire her tenacity,

and I have made the decision to be the one to go with her on this road trip and help keep them safe.

I will be covering some of the expenses myself as well, because this matters to me.

She can't do it alone, but I can't do this alone either, so we are starting a GoFundMe

to try to raise $10,000 to cover very practical things. Number one, we need to get her car

running again, and we've got fuel costs. It'll be a two-day trip with a three-year-old,

so we've got some lodging costs to cover. We have to pay the first month's rent and the

deposit for the apartments, even though it's low-income housing, and they're going to need all

of the basic living essentials to start to make it a legally safe home for her child under the laws,

so Child Protective Services is happy about that, and to just get them back on their feet.

There are some good people in this area where she is moving who, while they are not in a financial

position to help significantly, they have offered to help emotionally and with some child care

as she gets back on her feet. This isn't charity for charity's sake. This is empowerment in real

time and making a true difference in the life of a real human being, and so what I am asking is,

if you are able to help financially, I would be incredibly grateful. Even a small donation matters,

every dollar matters, and if you are not in a position to donate money, just sharing the link

that I'm going to post in the description of this podcast, sharing that link with your network

would help so very much. Again, for safety reasons, I've got to keep names and details very private,

and that's why I am administering this GoFundMe so that the dangerous people in her life do not

find out about this. Thankfully, they don't listen to my podcast, but sometimes it just starts with

making sure that someone has the resources to leave a bad situation safely and start fresh and not

only empower herself, but empower her daughter to have a better life than she has had, and that is

what I am personally very committed to with this small family. So thank you for listening to that,

and thank you for listening to my predictions for 2026. I really do think it's going to be better

than 2025. Keep our fingers crossed, but this is what it means to you as car buyers in 2026,

and again, anytime you have car buying questions or concerns, please feel free to go to my website,

thecarcheck.com. I have so many resources out there. I'm going to be continuing to revamp my

online course library, and of course, if you just need help directly, you don't want to deal with it

at all. We've got the perfect car package where you can work with me directly. So thank you, folks.

Here's to a fantastic New Year's. I wish you all a wonderful 2026. May all of your dreams and goals

come true. I'm out of here.

The State of the Car Buyer in 2026 - Why Buying a Car Still Feels Risky

About this episode

tariff

supply chain issues

MSRP

destination charge

automotive sales

interest rates

auto loan rates

APR

sticker shock

commitment shock

leasing

Fiat 600S

hybrid

Toyota RAV4

Toyota Camry

economies of scale

Subaru Crosstrek

financial incentives

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