Auto Dealerships NAICS 441110

May 19, 2026 - Auto Industry Demand Getting Hit From All Sides

• Rising inflation, tariffs, and the ongoing Middle East war are expected to further weaken US auto demand in 2026, pressuring vehicle and parts imports while boosting demand for aftermarket repair components, according to S&P Global. Containerized US imports of automobiles and auto parts fell 9.4% in 2025 as higher borrowing costs, steel tariffs and elevated vehicle prices weighed on consumers, with prolonged conflict expected to push prices even higher and suppress container volumes further. At the same time, aftermarket suppliers such as Advance Auto Parts are benefiting as consumers delay new vehicle purchases and keep older cars on the road longer. Auto parts importers are also accelerating sourcing diversification away from China toward Southeast Asia, South Korea and Japan, though industry experts warn supply chain shifts could take up to two years amid continued tariff uncertainty and volatile trade policies.
• The US auto dealership industry, now a trillion-dollar market, is rapidly consolidating as scale becomes critical to staying competitive. The National Automobile Dealers Association reported that the top 150 dealer groups now account for 27% of new vehicle sales, up steadily over the past decade. While most of the roughly 17,000 franchised dealers still operate fewer than five stores, that share has declined as larger groups expand and acquire smaller dealers. Major public retailers are fueling this shift, with companies like Lithia Motors hitting a market cap of $6 billion, while others have posted double-digit growth while increasing store counts. Investor interest also remains strong, with dealership groups valued in the billions and new entrants like used car giant Carvana - valued at $74 billion - now selling new cars and adding pressure. The result is a clear “grow or sell” dynamic, where smaller dealerships face mounting challenges.

• Car affordability has become a major drag on US auto sales heading into 2026, with 52% of dealers citing the economy as a barrier to sales in Q1 2026 - up from 45% a year prior. A Washington Post/ABC News poll found 74% of Americans consider buying a new car unaffordable, unsurprising given the average new car price was $49,191 in January 2026. Monthly payments are also at record highs, with Edmunds reporting the average financed new car payment reaching $772 in Q4 2025 and one in five buyers now committing to $1,000 or more per month, contributing to Cox's projection that February 2026 vehicle sales will fall 3.4% year-over-year. Some relief may be on the horizon through lower interest rates and more off-lease used vehicles entering the market, though luxury brands like Porsche (averaging $128,761) continue pushing overall price averages upward.
• Car buyers paid over $26 billion in “destination charges” in 2025, according to Edmunds, with the average fee now sitting around $1,600 (up from roughly $1,200 in 2020). The charges, which are supposed to cover the cost of shipping a new vehicle to its buyer, have climbed steadily in recent years as fuel and logistics costs have risen. They now range from about $1,100 to over $2,600 depending on the vehicle, with the Ford F-150's charge alone jumping by $900 since 2020. Automakers including Ford and GM say the increases reflect rising transportation and business costs, though dealers and analysts suggest the fees have become a convenient way to offset tariff expenses without touching the advertised sticker price. Dealers are caught in the middle, fielding customer frustration over fees they don't set or control. A 2023 class-action lawsuit challenging the charges was dismissed last October.