Based on local market reports from late 2025 and early 2026, the automotive landscape is characterized by high prices, tight inventory for affordable options, and a slowing, yet still positive, demand, particularly within California.
California Market Trends (Q1 2026)
Market Slowdown: After a 3.3% increase in registrations in 2025, California's new vehicle market is projected to decline to 1.74 million units in 2026, down from 1.80 million in 2025.
Headwinds: High interest rates, elevated transaction prices, and low consumer confidence are limiting growth.
EV Adoption Shifts: After years of growth, Zero-Emission Vehicle (ZEV) registrations in California declined to 20.9% of the market in 2025, down from a peak of 22.0% in 2024, marking the first year-over-year decline since 2020.
Used Car Market Conditions
Tightening Supply: Used car inventory is tightening again, especially for vehicles under $15,000, which have only a 27-day supply.
Price Increases: Used car prices have risen 42% since early 2025 due to new car shortages and supply chain issues. In Southern California, three-year-old used car prices surged 43% compared to 2019, reaching an average of $33,200.
High Demand: Dealers are reporting strong demand for used cars, with sales in March 2026 reaching their highest level in a year.
Local Consumer and Dealer Behavior
Used Over New: Due to high new car prices, many shoppers are turning to the used market, where prices remain inflated.
Inventory Issues: Dealers are struggling to maintain stock of affordable used vehicles, with some holding used cars longer in anticipation of higher demand, such as after tax refunds.
Long-Term Trends: The average age of vehicles on the road is now 12.8 years, indicating more consumers are holding onto older vehicles
Regional Highlights (Los Angeles Area)
High Costs: LA continues to be a high-cost area, with used car prices in Southern California significantly higher than in previous years.
Fuel Prices: Increased gas prices are affecting the local market, driving interest in more fuel-efficient options, although demand for used EVs has seen a jump.
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