February Sales Improve Over January, but Impact of Lower EV Demand Lingers

JD Power:

The Total Sales Forecast

Total new-vehicle sales for February 2026, including retail and non-retail transactions, are projected to reach 1,183,000, a 3.8% decrease year-over-year, according to a joint forecast from JD Power and GlobalData. February 2026 has 24 selling days, the same as February 2025.

The seasonally adjusted annualized rate (SAAR) for total new-vehicle sales is expected to be 15.6 million units, down 0.6 million units from February 2025.

The Retail Sales Forecast

New-vehicle retail sales for February 2026 are projected to reach 931,400, a 4.6% decrease from February 2025.

The seasonally adjusted annualized rate (SAAR) for Retail new-vehicle sales is expected to be 12.6 million units, down 0.6 million units from February 2025.

The Takeaways

Thomas King, president of OEM solutions at JD Power:

“The February sales pace shows a modest improvement over January, but will be down from a year ago, with retail sales projected to decline 4.6%. As in January, performance is being shaped by depressed electric vehicle (EV) retail demand—EVs are expected to account for just 6.6% of retail sales, down 1.8 percentage points from a year ago—while elevated transaction prices continue to weigh on volumes through ongoing affordability pressure. Despite the relatively slow start to the year, acceleration in the sales pace is expected over the balance of 2026, starting with March, which is traditionally a high-volume sales month with elevated promotional activity from manufacturers.”

Average retail transaction prices are expected to rise 2.7% to $46,303 from a year ago, with non-EV prices increasing 3.0% to $46,097 and EV prices rising 2.6% to $46,528. The combination of reduced EV subsidies, higher EV pricing and more modest discounting across the industry continues to influence shopper behavior and segment mix.

The average manufacturer's incentive spend per vehicle is on track to reach $3,293, which is $63 higher than a year ago. However, the changes in average discounts are heavily influenced by the decline in EV sales. Discounts on EVs are expected to average $10,356 in February, down $1,664 compared with February 2025. Meanwhile, discounts on non-EVs are projected at $3,085, an increase of $346 from last year. As a percentage of MSRP, discounts on non-EVs are at 6.0% in February, up 0.6ppts from a year ago.

“Affordability pressure remains significant, with the average monthly finance payment reaching $811, up $32 from a year ago. In response, more consumers are turning to 84-month loan terms, which are expected to account for 12.7% of financed sales this month compared to 7.7% a year ago.

“Easing interest rates and strong used-vehicle values are providing some relief to buyers facing elevated monthly payments. The average interest rate for new-vehicle loans in February is 6.72%, a decrease of 31 basis points from a year ago.

“The average used-vehicle price is $29,488, up $448 from a year ago. This reflects the continued low supply of recent model-year used vehicles due to lower new-vehicle production during the pandemic. The ongoing strength of used-vehicle prices continues to be good news for new-vehicle buyers with a trade-in, with average trade-in equity in February at $7,013, essentially flat from a year ago. However, the number of new-vehicle buyers with negative equity on their trade-in is expected to reach 31.5%—an increase of 3.4 percentage points from February 2025.

“Regarding total consumer spending on new vehicles, the elevated transaction prices in February aren’t quite enough to offset the lower sales pace, with consumers on track to spend nearly $41.3 billion on new vehicles this month—2.4% lower than a year ago.”

For retailers, profit per unit—which includes vehicle gross plus finance and insurance income—is expected to be $2,524, up $83 from February 2025 and up $160 from January 2026. Total aggregate retailer profit from new-vehicle sales for this month is projected to be $2.3 billion, down 1.8% from last year.

“Looking ahead, multiple automakers have publicly stated their intent to increase their sales volume in 2026. However, given total new vehicle sales this year are expected to be similar to a year ago, and few, if any automakers are planning for a sales contraction, competitive intensity can be expected to rise in the coming months.”

Sales & SAAR Comparison

The Details

• Fleet sales are expected to total 251,681 units in February, down 0.4% from February 2025. Fleet volume is expected to account for 21.3% of total light-vehicle sales, up 0.7 percentage points from a year ago.
• Internal combustion engine (ICE) vehicles are projected to account for 78.7% of new-vehicle retail sales, an increase of 2.6 percentage points from a year ago. Hybrid electric vehicles (HEV) are expected to account for 13.5% of new-vehicle retail sales, up 0.1 percentage points. EVs are expected to account for 6.6% of sales, down 1.8 percentage points, while plug-in hybrid vehicles (PHEV) are on pace to make up 1.1% of sales, down 1.0 percentage points from February 2025.
• U.S. final assembly vehicles are expected to make up 55.6% of sales in February, up 4.4 percentage points from a year ago.
• Retail inventory levels are currently at 2.19 million units, a 1.4% increase from February 2025.
• The industry’s inventory days of supply is 65 days in February, up from 3 days from a year ago.
• The average new-vehicle retail transaction price in February is expected to reach $46,303, up $1,225 from February 2025. The transaction price as a percentage of MSRP was 89.1% in February, down 0.2 percentage points from a year ago. The average new-retail transaction price for ICE/hybrid vehicles is expected to reach $46,097, up $1,329 from February 2025. The average new-retail transaction price for EVs is expected to reach $46,528, up $1,169 from February 2025.
• Retail buyers are on pace to spend $41.3 billion on new vehicles, down $1.0 billion from February 2025.
• Average incentive spending per unit in January is expected to reach $3,293, up $63 from February 2025. Incentive spending as a percentage of the average MSRP is expected to decrease to 6.3%, down 0.1 percentage point from February 2025. Average incentive spending per unit for ICE/hybrid vehicles is expected to reach $3,085, up $346 from February 2025. Average incentive spending for EVs is expected to reach $10,356, down $1,664 from February 2025.
• Leasing is expected to account for 24.4% of sales this month, flat from a year ago.
• The average time a new vehicle remains in the dealer's possession before sale is expected to be 59 days in February, up from 58 days a year ago.
• 26.0% of vehicles sold in less than 10 days in February, down 4.3 percentage points from a year ago.
• Average monthly finance payments are on pace to be $811, up $32 from February 2025. The average interest rate for new-vehicle loans is expected to be 6.72%, down 0.31 percentage points from a year ago.
• So far in February, average used-vehicle retail prices are $29,488, up $448 from a year ago.
• Trade-in equity is trending towards $7,013 this month, which is down $16 from a year ago.
• 31.5% of trade-ins are expected to carry negative equity this month—an increase of 3.4 percentage points from February 2025.
• Finance loans with terms greater than or equal to 84 months are expected to reach 12.7% of finance sales this month, up 1.8 percentage points from February 2025.

Electrification Outlook

Tyson Jominy, senior vice president of OEM customer success at JD Power:

“As noted above, EV share is holding in the mid-6% range, nearly two points below last year and well off the high driven by changes in U.S. policy in Q3 2025.

“The pullback is concentrated in the mass market, where EV share contracted to 1.9% from 4.0% a year ago. In contrast, EVs represent over 26.4% of premium sales year to date – a figure which includes direct-to-consumer brands – and only 5 percentage points below last year’s pace.”

Global Sales Outlook

David Oakley, manager, Americas vehicle sales forecasts at GlobalData:

“January global light-vehicle sales are estimated to have decreased 1.9% year over year to 6.6 million units. Most major markets saw declines, but a particularly notable contraction in China meant that the global industry was unlikely to match year-ago levels. The selling rate for January was estimated at 80.8 million units, down from 96.4 million units in December.

“Sales in China decreased 13.4% year over year in January, as the effects of the government’s move to tighten access to subsidies for electrified vehicles were apparent, with some lower-cost models now ineligible for the scheme. In addition, there is now a 5% tax imposed on EVs and plug-in hybrids, likely further cooling demand. Meanwhile, European countries also saw declines in January, with the key German market impacted by rising unemployment and a sluggish economic outlook.

“February sales are expected to decrease 5.5% from February 2025. Once again, China is likely to be a major contributor to the year over year loss, with last year’s robust sales now providing a high base effect, an issue that could be a feature of 2026. On the other hand, India is likely to see strong growth in February, as tax reductions implemented in September 2025 continue to generate year over year gains. The global selling rate is expected to reach 89.3 million units in February, up slightly from a rate of 89.2 million units in February 2025.

“Our forecast for total global sales in 2026 stands at 93.5 million units, up 1.9% year over year. Our Chinese sales outlook has been revised down by around 300k units based on weaker momentum in the new year. Although China should still see some growth in 2026, developing markets such as India will also contribute significantly to the global expansion in light-vehicle sales this year, while most mature markets are expected to see a flat outcome or only modest gains.”

About JD Power

JD Power is a proven leader in business-critical data and intelligence to drive auto-related decisions with confidence and clarity. By leveraging unmatched proprietary data, advanced analytics and deep industry expertise, JD Power fuels original equipment manufacturers, retailers, lenders, insurers and partners to enhance their performance.

Since 1968, JD Power has delivered incisive guidance and intelligence about customer interactions with brands and products. To learn more about the company's business offerings, visit JDPower.com.

About GlobalData: https://www.globaldata.com/

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