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Buyers kept buying in Q3, but new vehicle prices hit a record $52,770 and the average loan stretched to 69.5 months. See where demand is moving, where supply is building, and what to do about both in Q4. |
That's the question hanging over an otherwise strong Q3.
New vehicle movement increased 3.1% year over year.
Turn rates improved for the third consecutive quarter.
Used vehicle movement reached a multi-year high.
Consumers are still buying, and the market is still moving.
But how long can the current pace last?
Record vehicle prices, longer loan terms, low consumer confidence, and rising credit risk are putting more pressure behind every sale. Buyers are responding by choosing smaller vehicles, more efficient powertrains, and lower price points.
Buyers still want new vehicles, and they're picking the ones that cost less to buy and run. Three trends stand out in Q3:
What this means for your lot: Keep affordable segments stocked and easy to find online. Check aging weekly on luxury, XL SUV, and heavy-duty truck units.
New vehicle prices hit a record in Q3, and more increases are likely.
What this means for your lot: Promote your current model-year units as the better price while 2027 models are still arriving, and give shoppers a reason to buy now. Use discounts and incentives only on the vehicles that aren't selling, and feature those vehicles prominently so shoppers can find them.
With vehicle prices reaching record levels, buyers are relying more heavily on longer term loans to reach a workable monthly payment.
What this means for your lot: Keep leading with the monthly payment, because it works. State the loan term alongside it so buyers know what they're agreeing to. Qualify buyers early and honestly at the desk. With subprime volume rising, careful desking protects your margin and keeps you compliant.
Used demand is strong, but inventory is growing and vehicles are turning more slowly.
What this means for your lot: Buyers are shopping used, but supply is growing and vehicles are taking longer to sell. Keep your used and certified inventory competitively priced and marketed, and track your turn rate so slower units don't age on your lot.
Buyers are choosing hybrids over gas and electric, and EV demand is decreasing.
Gas is near $4.30 a gallon, up more than $1 from earlier levels.
What this means for your lot: Put hybrids first in your merchandising and ad spend. With gas near $4.30, fuel savings offset part of the monthly payment, so show buyers what they will save. Efficiency demand is strongest where pump prices are highest, so match your hybrid mix to your local fuel prices.
Dealers need to match inventory, pricing, and marketing to where demand is moving. Four priorities will help you do that.
Follow demand toward more affordable vehicles. Stock sedans, wagons, and small and mid-size SUVs, which lead inventory efficiency. Entry and mid-tier trims will outperform premium-heavy inventory while consumer confidence stays low. Put hybrids front and center in your merchandising and ad spend.
Manage slow inventory. Supply is building in luxury, XL SUVs, and full-size and heavy-duty trucks. Target marketing support at the VINs that need help, and feature them prominently so shoppers can find them.
Protect margin on fast movers. Reserve discounts and incentives for vehicles that need help to sell, not the ones already flying off the lot.
Make affordability clear. Lead with the monthly payment and state the loan term. With gas near $4.30, show hybrid buyers how much they will save on fuel.
Read the full Q3 2026 State of the Industry report for the complete analysis of inventory, pricing, credit, and powertrain trends.
About Catalyst IQ
Catalyst IQ is an integrated automotive marketing platform that helps dealerships make smarter decisions and sell more cars using real-time data, AI-powered insights, and expert human support. From digital advertising and dealership web presence to SEO and AEO for dealerships, and engagement, every solution works together to drive measurable growth.