🚗 Demand Slows, Used Holds: The 4 Signals Dealers Need Today

TOGETHER WITH

Last day of 2025 and we know you’re playing till the last buzzer.

Before we get into the demand, pricing, and market data, let me invite you again to join us this morning for another Strategy Session with Damon Lester.

Check out yesterday’s talk with Brian Kramer here.

And tell us, how do you plan to be 1% better tomorrow?

Keep Pushing Back
-Chris with Paul, Kyle & Kristi

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TOGETHER WITH AUTOMOTIVEMASTERMIND

Tools That Actually Help

Not every AI platform makes your day easier. Some just get in the way.

In our next ASOTU Edge webinar, we chat with experts Sarah Hicks and Danny Veliz to discuss how AI is being used inside real dealerships to cut down busywork, identify the right customers faster, and support stronger conversations.

You will see what’s working now and how to use it without adding complexity to your workflow.

Join us on January 7th at 2PM ET to learn how AI can start pulling its weight in your store.

Register today.

THE NEWS

US Auto Market Enters 2026 With Demand Under Pressure

It’s New Year’s Eve, and the headlines feel like keyholes into 2026. Each one offers a small view, and together they give us a clearer glimpse of what’s waiting on the other side of midnight.

The stories below are selected and ordered to build that picture. We start with demand, because it sets the tone for everything that follows. Then we look at used pricing, where dealers often feel shifts first. From there, tariff pressure helps explain the cost and OEM decisions shaping the market, and we close with EVs and China, where global competition still sits behind many open questions.

These articles won’t tell you more about your day than you already know. But they do help show how today’s realities were shaped upstream, and how those same currents are already moving toward what comes next.

S&P Global Mobility Signals Slower Sales and Persistent Affordability Challenges

US auto sales are closing 2025 without forward momentum. S&P Global Mobility projects December sales of roughly 1.4 million units, translating to a 15.4 million SAAR. That pace matches the prior two months and marks the slowest quarterly run rate since early 2023. Looking ahead, S&P forecasts total US sales of about 15.9 million units in 2026, down roughly 2.5 percent from 2025.

The same affordability pressure dealers feel daily is also shaping how automakers think about margins and incentive strategy. Investors are watching how that pressure shows up in pricing discipline and incentives.

The core issue remains affordability. Higher vehicle prices, elevated interest rates that have only recently begun easing, and cautious consumers continue to cap demand. Battery electric vehicle share is also softening, with December BEV penetration estimated near 6 percent as incentives fade and buyers reassess value.

For stores, volume will require sharper execution, smarter inventory choices, and tighter alignment with financing realities.

Used Vehicle Prices Stabilize as Lane Demand Holds

Manheim Index Shows Seasonal Normalization and Select Segment Strength

Against a slower retail backdrop, the wholesale market is behaving more predictably. The Manheim Used Vehicle Value Index rose to 206.0 in mid-December, up 0.3 percent from November and 0.6 percent year over year on an adjusted basis. Sales conversion and retention rates at Manheim remain strong, signaling healthy dealer demand even as activity seasonally cools.

EV and Luxury Segments Diverge

EV wholesale values declined modestly month over month but remain higher year over year, while luxury segments continue to outperform the broader market. Trucks and compact cars saw the most pressure. Wholesale supply sits near 30 days, a balanced level historically.

Disciplined buying still works, especially as lower rates and improved credit availability begin filtering into consumer financing.

Tariffs Reshape Costs, Pricing, and OEM Strategy

Reuters Tracker Highlights Profit Pressure Across Automakers and Suppliers

Tariffs are now a structural factor in auto economics. Reuters data shows hundreds of global companies reporting financial hits, margin warnings, price increases, or supply chain shifts tied to US trade policy. Automakers face higher input costs for materials, electronics, and logistics, while relocating production adds labor expense.

For retailers, tariffs influence MSRP decisions, incentive strategies, parts pricing, and long-term model availability. Even when demand stabilizes, cost pressure upstream can limit how aggressively OEMs support volume at the dealership level.

China’s EV Price War Goes Global

Leapmotor and Others Accelerate Overseas Expansion

China’s EV market is entering a consolidation phase. Domestic sales growth is slowing, price competition is intensifying, and smaller players are being squeezed out. In response, manufacturers are expanding overseas. Leapmotor expects to sell more than 1 million vehicles in 2026 and targets over 4 million annually within a decade, supported by partnerships with Stellantis and localized production in Europe.

Why This Matters for US Dealers

Global EV competition influences future pricing, technology standards, and brand strategies worldwide. As Chinese automakers push outward and Western OEMs recalibrate EV plans, dealers should expect continued volatility in EV product cadence, incentives, and consumer perception through 2026.

Slower sales, stabilizing used values, tariff-driven cost pressure, and global EV competition are converging into one story. Success in 2026 will favor dealers who stay disciplined on inventory, informed on cost and pricing pressure, and flexible as product mix and EV demand continue to evolve.

AROUND THE ASOTU-VERSE

Dealer Conferences and Industry Events (2026)

• February 3-6: NADA Show 2026, Las Vegas, NV

• May 12-15: ASOTU CON 2026, Hanover, MD

Quick Hits

• 🤖 AI: Frost and Sullivan predicts in-vehicle AI will surge from a $43B market in 2025 to a $238B opportunity by 2030 as automakers shift from cloud-only features to real-time, on-board “edge” intelligence that drives personalization, battery management, and OTA-powered cost savings, so yes, the car might eventually snitch about how much you beatbox on the commute.

• 💰 Economy: GDP grew at a 4.3% annual rate in Q3 2025 (up from 3.8% in Q2), a solid macro signal for consumer activity even if auto demand still has to fight the affordability hangover.

• 🛒 Retail: Temu is trying to get into the franchise business… kinda: it launched a Shopify app that lets small US merchants list, manage inventory, and ship directly into Temu’s marketplace as Temu pivots away from direct-from-China shipping (thanks to the end of the de minimis loophole) and starts building a more local, warehouse-driven seller network.

Today in History

• 1955 – General Motors becomes the first U.S. corporation to make over US$1 billion in a year. Not the first US automaker, first corporation! Pretty big step for the nation, powered by the designers, factory workers, logicians, and retail efforts of the auto industry.

Thanks for reading, Friend. Shout-out to Jennifer (Blount) Sanford for sharing the email yesterday. We don’t deserve how good this community is to us, but we will keep doing our part in helping y’all do yours. Happy New Year’s Eve, Fam.