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**Comprehensive Report: What's Happening in the US Auto Market Today?**

Inventories Soar, Prices Reach Record High, and Consumers Await Relief

Washington – Friday (Updated Today):

The US auto market is experiencing one of its toughest periods in over a decade, characterized by a significant increase in unsold new car inventories, record-high prices, and a marked slowdown in consumer demand. While all-new 2026 models are already arriving in showrooms, a large number of 2024 and 2025 models remain unsold, creating a situation the market hasn't seen since before the pandemic.

Industry analysts confirmed this week that new car inventories have surpassed 2.9 million units, a level that is alarming both automakers and dealers. Despite this surplus, prices haven't fallen as much as many had anticipated, and have continued to rise steadily – by more than 42% since 2019 – prompting many potential buyers to reconsider their purchasing plans.

This imbalance—high inventory and high prices—has created a market “distortion” and become a major topic of discussion among consumers, distributors, manufacturers, and analysts.

### **First: Why is new car inventory growing so fast?

#### **1. Early arrival of 2026 models:

Automakers typically release their next year’s models in late fall, but this year many brands launched their models earlier than usual.

The senior marketing director of one major automaker explained:

“We assumed demand would remain as strong as it was in the post-pandemic years, so we increased production. The market changed faster than we anticipated, and we didn’t adapt in time.”

The early arrival of the 2026 models made the 2024 and 2025 models appear outdated—at least theoretically—even though they are still brand new. This put pressure on dealerships to quickly clear their inventory.

#### **2. Consumer Purchasing Power Slows:

With the average price of a new car reaching $50,000, coupled with rising auto loan interest rates, millions of Americans can no longer afford new vehicles.

“Today’s prices are not only high, but also unrealistic for a large segment of the population,” says economist Laura Peterson. “Consumers have become more price-sensitive and cautious.”

This decline in purchasing power has directly contributed to soaring inventory levels at car dealerships.

#### **3. Shift to Used Vehicles:

The soaring prices of new cars have driven many buyers toward used or nearly new vehicles. Searches for used cars have surged this year, while demand for new cars in the lower and mid-price ranges has plummeted.

One California car dealer noted:

“People are only buying new cars if they want a luxury, electric, or discounted vehicle. Sales of traditional cars have slowed considerably.”

#### **4. Overproduction After a Supply Chain Crisis:

When the global shortage of microchips and automotive components eased, automakers resumed full-capacity production.

However, demand forecasts were overestimated, creating a supply glut.

As a result, factories produced more vehicles than the market currently needs.

### **Second: Why Do Prices Continue to Rise Despite High Inventory?**

Usually, an oversupply leads to lower prices. But today's market is different.

 #### **1. Automakers Protecting Profit Margins**

Automakers do not want to repeat pre-pandemic profit patterns.  

Industry analyst **Michael Robertson** explains:

> **“Companies prefer selling fewer cars at higher margins rather than selling a lot of cars at low margins. This has become the new business model.”**

#### **2. Higher Production Costs**

Raw materials, transportation, labor, and component costs have all increased since 2020 — and companies continue to justify price hikes through these rising costs.

#### **3. More Production of High-End Vehicles**

Automakers shifted production toward larger SUVs, luxury trims, and pickup trucks — all high-margin vehicles. Production of low-cost cars decreased significantly.

Because the available vehicle mix is more expensive, the average transaction price keeps climbing.

#### **4. Lack of Aggressive Price Competition**

Dealerships still hope that seasonal demand will recover.  

This has delayed major price cuts, but analysts believe the industry is approaching a turning point.

Many expect discounts to become more aggressive in early 2026.

### **III. Expert Opinions — Trusted Industry Testimony**

#### **1. Analyst at J.D. Power**

> **“The market has reached a point where it needs a reset. Without substantial incentives soon, inventory levels will continue to rise.”**

#### **2. Financial Expert at Bankrate**

> **“High interest rates are one of the biggest obstacles to new-car purchases. Buyers today pay nearly double what they paid in 2019 to finance the same model.”**

#### **3. President of the National Automobile Dealers Association (NADA)**

> **“We’re facing one of the most unpredictable markets in years. Inventory is rising, but prices haven’t dropped to match the oversupply.

### **Fourth: How Rising Prices Affect Consumers

#### **1. Monthly Payments on the Record

In many states, the average monthly payment for a new car has reached $850, pushing many families out of the new car market.

#### **2. Decline in First-Time Buyers

Buying a new car has become a "special occasion," no longer a necessity for many families.

#### **3. Increased Demand for Economy Vehicles

Small, economy cars are in high demand—but also in short supply due to automakers' focus on larger models.

#### **4. Market Reaches a "Price Resistance" Point

Many analysts believe the American consumer has reached a point of psychological collapse, the moment when buyers simply refuse to pay exorbitant prices.

Fifth: What Will Happen in the Coming Weeks?

Experts are closely monitoring the market. We are likely to see three scenarios:

#### **1. Big Discounts Before Year-End

Dealers may finally start offering significant price reductions to clear 2024 and 2025 inventory.

#### **2. Incentive Packages from Automakers

These may include:

Cashback offers

0% or low-interest financing

Extended warranties

Dealer rewards

Such incentives were common before 2020 and may soon return.

#### **3. Greater Competition in Electric and Hybrid Vehicles**

While electric vehicles are receiving more incentives in some states, demand for electric vehicles has slowed considerably, which may force automakers to cut prices even further.

### **VI. How Are Auto Dealers Responding Currently?**

#### **1. Trying to Clear 2024 and 2025 Inventory**

Targeted, small discounts are already visible—but they're still far from what consumers expect.

#### **2. Invest More in Online Advertising**

Dealers are now focusing on digital platforms because buyers are researching prices online before visiting a showroom.

#### **3. Shifting Inventory Between States**

Auto dealers are swapping inventory between regions to avoid the pressure of excess inventory at the regional level.

Seventh: Will There Be a Major Price Crash?

Industry experts say a sudden, sharp price crash is unlikely.

However, they do expect:

- Gradual price declines

Stronger incentives during sales events

Lower prices on older models

Increased competition among dealerships

Some analysts estimate that prices will fall by 5% to 10% by early 2026, largely depending on inventory levels.

### **Eighth: A General Summary of the Auto Market Today**

The situation can be summarized in three key points:

#### **1. Inventory Levels Are Extremely High**

Large numbers of 2024 and 2025 model year vehicles remain unsold, while 2026 models are already flooding the market.

#### **2. Prices Are at Historic Highs**

With prices up more than 42% since 2019, affordability has become a major concern in the United States.

#### **3. Consumers Now Have Power**

As a result of high inventory levels and increased competition among auto dealers, buyers now have more bargaining power than at any time in the past five years.

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