Tariffs brought in by President Donald Trump are poised to increase the price gap between new and used cars in the U.S. in 2026, hiking the cost of new vehicles and driving buyers toward secondhand motors, supporting demand and price stability in the used-vehicle sector.
This is one of the conclusions of Spyne, an India-based automotive retail technology company, in its recent report: 2026 Will Test U.S. Dealership Agility More Than Ever, which forecasts the used-vehicle market will “hold steady thanks to sustained replacement demand and limited availability.”
Analysts predict that used-car values will maintain their level or tick up marginally throughout most of 2026, noted the report.
“If new-vehicle prices climb faster than wages, used vehicles become the release valve,” said Sanjay Varnwal, co-founder and CEO of Spyne. “But even used-car pricing won’t behave uniformly; electrified vehicles, luxury SUVs, and imports will each have their own trajectory.”
Wholesale prices are staying strong because used-car supply is limited and more buyers are turning to pre-owned models. The return of leased vehicles — especially electric cars from 2021-2022 — should increase inventory, but higher repair costs and slower reconditioning may delay their appearance on dealer forecourts.
The report looked at how the combination of new tariffs, shifting supply chain dynamics, and weakening consumer affordability is altering how vehicles are priced, sourced, and sold.
Spyne’s proprietary dealer analytics point to a widening “intent gap”, which the company defines as the lag between consumer browsing behavior and real purchasing action. “This mirrors public sentiment data and serves as a leading indicator of slowdown risk,” found the report.
Affordability crunch
Affordability “remains the soft underbelly of the market,” said the authors, citing Kelley Blue Book data indicating that the average U.S. new-vehicle transaction price reached $50,080 in September, the first time it had crossed the $50,000 threshold, and up 3.6% year over year.
“The Cox/Moody’s Vehicle Affordability Index shows it now takes more weeks of median income to buy a new car than at any time in the past decade,” stated the report, adding that tariffs alone could add $2,000-$3,000 per unit once costs are fully passed on to buyers.
“Tariff exposure and broader economic headwinds are likely to cool U.S. car demand in 2026, as supply complexities intensify,” stated the report authors.
“Tariffs, consumer sentiment, and production shifts will converge in 2026, making the interplay of supply, demand, and price the single most important lens for forecasting dealership profitability and buyer behaviour.”
Dealership inventories have bounced back from their Covid-era nadirs, but sourcing the right vehicles is still difficult amid tariff-related supply realignments.
The report cited Cox Automotive data showing that as of July this year, total U.S. inventory reached 2.83 million units, equivalent to 82 days’ supply, up 12 days from the previous month.
“Import-heavy models are facing allocation volatility as automakers respond to tariffs and rising landed costs,” said Varnwal. “Dealership supply will become more about composition than volume. You might have full lots, but not of the models customers want. The challenge in 2026 is to match the right vehicle to the right buyer faster than anyone else.”
The CEO added that tariffs have caused manufacturing and supply routes to be revised, with automakers re-evaluating sourcing from China, Europe, and Mexico, and suppliers moving to localize production.
In the meantime, “landing a vehicle in the U.S. will involve longer lead times, fragmented shipping routes, and higher compliance friction,” predicted the report.
The report concludes that “2026 will test dealership agility more than ever. While macro conditions remain unpredictable, the ability to react faster than market averages will separate winners from laggards.”
It urged dealers to track not just overall inventory but its alignment with demand, integrate real-time digital metrics, and adjust incentives and financing strategies dynamically — emphasizing payment-focused messaging over price. Dealers should also invest in AI-driven retail systems linking pricing, inventory, and demand analytics.
Spyne is an AI-based automotive retail technology company headquartered in India, with a subsidiary in the U.S. Founded by Sanjay Varnwal and Deepti Prasad, the company provides digital tools for automobile dealerships, including imaging, 360-degree visuals, and AI systems for lead management and customer engagement.
It serves dealerships and OEMs across multiple regions, including the U.S., Europe, EMEA, and APAC, and has raised more than $25 million from investors such as Vertex Ventures SEA and India, Accel, Storm Ventures, and Alteria Capital.
