A tariff is a tax that governments charge on goods coming from other countries. In cars, this means that if parts or cars are imported, they can cost more because of these taxes.
Supply chain issues happen when there are problems getting parts or materials needed to make products. In cars, this can mean fewer vehicles available for sale and higher prices.
The destination charge is a fee that you pay when buying a car to cover the cost of getting it from the factory to the dealership. It's an additional cost on top of the car's price.
Automotive sales are how many cars are sold in a certain time. If sales go down, it might mean people are not buying cars as much, often due to economic reasons.
Auto loan rates are the extra money you pay when you borrow to buy a car. If these rates go down, it can make monthly payments lower and cars more affordable.
APR means Annual Percentage Rate. It's the interest rate you pay on a loan, shown as a percentage, which tells you how much extra you'll pay back on top of the money you borrowed.
Sticker shock is when you feel surprised or shocked by how much something costs, especially if it's much higher than what you expected. In cars, it means seeing a price that seems too high.
Commitment shock is the feeling of worry or hesitation when you're about to make a big purchase, like a car, especially if you're not sure you can afford it.
Leasing means you pay to use a car for a certain time instead of buying it. At the end of the lease, you can either buy the car or give it back. It usually costs less each month than buying a car.
The Fiat 600 is a small car made by the Italian company Fiat a long time ago, between 1955 and 1969. It's known for being easy to drive around cities and is loved by many car enthusiasts because of its unique look and history. People talk about it because it's a classic car that represents a different time in the automotive world.
A hybrid car uses both a gas engine and an electric motor to save fuel and reduce pollution. This means you can drive it like a regular car, but it uses less gas and is better for the environment.
The RAV4 is a small SUV made by Toyota. It's popular because it's practical and easy to drive. The new version will be a hybrid, which means it will use both gas and electricity to save on fuel.
Economies of scale mean that as a company makes more of something, the cost to make each one goes down. For car manufacturers, making fewer types of engines can save money.
The Subaru Crosstrek Hybrid is a small SUV that uses both gas and electricity to drive. It's good for people who want a car that's efficient and can handle different types of roads.
Financial incentives are deals or discounts that car companies offer to make it cheaper for you to buy a car. This can include lower interest rates or cash back.
LIVE
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.
About this episode
Navigating the car buying landscape in 2026 feels riskier than ever, with uncertainty stemming from trade wars, shifting policies, and lingering supply chain issues. The episode explores how these factors have created a confusing market, leading to hesitance among buyers. While some positive trends like lower interest rates and potential leasing incentives emerge, the overall sentiment remains cautious. The host shares insights on the automotive industry's future, including a shift towards hybrids and the importance of understanding financial options amidst ongoing economic challenges.
In this episode, The Car Chick® discusses the current state of the automotive industry as we enter 2026, reflecting on the challenges faced in 2025, including economic uncertainty and shifts in consumer confidence. She shares predictions for the upcoming year, emphasizing a potential shift from electric vehicles (EVs) to hybrids, and highlights the importance of empowerment through mobility, illustrated by a personal story of helping a woman in need.
Takeaways
Car buying feels uncomfortable and risky in 2026.
2025 was marked by uncertainty and unexpected challenges.
The automotive industry is looking for stability and profits.
Interest rates have dropped, but car prices remain high.
Financial incentives from manufacturers may increase in 2026.
Leasing may become more attractive with lower rates.
