Q1 2026 US Auto Sales Soften: SAAR Drops to 16.0M

US new-vehicle sales softened more in Q1 than most analysts expected. S&P Global Mobility put March 2026 retail sales at roughly 1.37 million units, translating to a 16.0 million seasonally-adjusted annual rate (SAAR). That's in line with the 15.8M SAAR posted in February, but well below the 17.9M pace from March 2025. Year-over-year, the first quarter of 2026 closed about 7% off the same period last year. For shoppers, it's the first real buyer's market the US has seen since 2019.

What changed

A handful of factors hit at once. Affordability headwinds got worse. Average transaction prices stayed within $200 of 2025 levels, but financing became more expensive as average new-loan rates climbed back above 7% in February. Down-payment averages went up too, which pushed marginal buyers out of the market.

Demand-side, three trends matter:

• EV demand cooled after the federal Section 30D credit ended for vehicles acquired after September 30, 2025. EV market share dropped from 9.4% in Q4 2025 to 7.6% in Q1 2026.
• Pickup demand softened unusually fast, especially full-size. Days-supply on F-150, Silverado 1500, and Ram 1500 crossed 90 days for the first time since 2020.
• Used-vehicle demand picked up some of the slack, with used SAAR running closer to 2024 levels even as new sales fell.

Supply-side, automakers are still producing at near-capacity. Production has been slow to adjust, and the result is rising inventory across most segments.

Where days-supply landed in March

Inventory of 60 days or less is generally considered tight. 90 days or more starts to put real pressure on incentive spending. Here's where the major segments sit at the end of Q1:

Segment	March 2026 days-supply	Vs March 2025
Full-size pickup	92	+28
Mid-size pickup	78	+12
Full-size SUV	89	+18
Mid-size SUV	71	+10
Compact SUV	62	+5
Compact car	54	-3
Mid-size sedan	67	+9
EV (all classes)	113	+47

Three takeaways. EV inventory is now well above any segment in the market. Pickup days-supply has climbed more than any other ICE segment. Compact cars (Civic, Corolla, Sentra) are actually tighter than they were a year ago, partly because automakers cut compact-car production aggressively from 2022 to 2024 and demand has now come back faster than supply.

What it means for buyers

Three practical effects of the Q1 numbers:

1. Cash on the hood is climbing. Manufacturer cash incentives across the industry averaged $3,612 per new vehicle in March, up from $2,840 a year ago. Pickup-segment cash crossed $5,000 for the first time since 2020.
2. Lease deals got sharper. Captive lessors lowered money factors on most luxury and mainstream programs in February and March. Lease penetration as a share of total sales hit 26%, up from 23% a year ago.
3. Negotiation works again. From 2021 through 2024 most popular vehicles sold at or above MSRP. In March, the average transaction price came in roughly class="relative z-10",800 below MSRP across all brands. Buyers walking in with research and patience have real leverage for the first time in five years.

What's coming in Q2

Most forecasters expect Q2 to look similar to Q1. The 16.0M SAAR is widely seen as the new normal until financing rates ease or the economy steps up. A few catalysts could change that. Interest-rate cuts later in the year would loosen affordability constraints. New-model launches (the refreshed RAV4, the new Outback, the updated CR-V) could pull buyers into showrooms. And manufacturer-funded financing offers (already creeping back in for the first time in three years) could close some of the gap.

For now, if you've been waiting for a buyer's market in the US, this is what one looks like.