1. Affordability concerns dominated the automotive market in 2025, impacting CARG. 2. Rising vehicle ownership costs pushed consumers towards hybrids and budget-friendly models. 3. Post-EV tax credit expiration, hybrid vehicle demand surged significantly. 4. Stable new car pricing may shift as 2026 model-year prices are set. 5. Late-model used supply is expected to improve, easing pressure on older models.
FAQ
Why Bullish?
CARG's role as a leading platform positions it well for hybrid demand spikes.
How important is it?
The article highlights trends affecting car buying behavior directly related to CARG’s services.
Why Long Term?
As consumer preferences for hybrids remain through 2026, CARG’s market relevance will grow.
CarGurus Reports on Automotive Market Trends for 2025 and Insights for 2026
BOSTON, Dec. 11, 2025 — CarGurus (Nasdaq: CARG), the leading automotive shopping site in the U.S., has released its 2025 Recap and 2026 Outlook, shedding light on key factors that influenced the automotive market throughout 2025 and expectations for the upcoming year. A notable shift towards affordability characterized the market, driven by rising ownership costs, tariff concerns, and challenges in the late-model used vehicle supply.
Understanding the Shift to Affordability
In 2025, affordability emerged as a primary focus for consumers. Kevin Roberts, Director of Economic and Market Intelligence at CarGurus, stated, "If 2024 was defined by declining affordability, 2025 was the year consumers actively pursued it, shaping both shopping behavior and automotive supply trends." He added that rising tariff costs and the expiration of the EV tax credit prompted shoppers to secure pricing before anticipated increases.
Key findings from the report highlighted the growing consumer preference for:
- Hybrids
- Smaller, affordable body styles
- Budget-friendly older models
Key Themes in the 2025 Automotive Landscape
Several significant trends emerged throughout 2025:
- Increased Vehicle Ownership Costs: Although average list prices plateaued year-over-year, rising costs for insurance, loans, and maintenance intensified pressures on consumers. The total cost of ownership for used vehicles surged by 36% since 2019, while the cost for new models has increased by 29%.
- Responsive Consumer Behavior: The fastest-selling new vehicles were predominantly hybrids, with models like the Hyundai Palisade Hybrid and several Toyota hybrids, averaging sale in under 20 days. This is significantly faster than the typical new vehicle, which averages over 60 days.
- Shifts Towards Used Vehicles: Certain small sedans and compact crossovers gained traction. For example, the Buick LeSabre and Chevrolet Cobalt were among the fastest-selling used models, averaging sales in approximately 25 to 30 days, compared to about 40 days for other used cars.
Impact of EV Tax Credits and the Rise of Hybrids
The expiration of EV tax credits led to a significant decline in electric vehicle sales. New EV retail sales dropped by 66% in the two months following the expiration compared to the prior months. During this period, demand for hybrids surged, reflected in an 18% increase in new hybrid inventory year-over-year and a 33% rise in new retail sales. Toyota's hybrids, such as the Land Cruiser and Sequoia, topped the viewing charts on the CarGurus platform.
Looking Ahead to 2026
As the automotive market transitions into 2026, several trends will likely emerge:
- Price Adjustments: Although tariffs had minimal impact on average prices in 2025, 2026 model-year pricing may significantly influence average new car prices. Higher manufacturer suggested retail prices (MSRPs) for 2026 models are anticipated, but previous incentives may help stabilize overall pricing.
- Improved Availability of Late-Model Used Cars: With the easing of the chip shortage, a greater supply of late-model used vehicles is expected, providing consumers with more options.
- Evaluating Natural EV Demand: As tax credits have expired, 2026 will offer a clearer perspective on EV demand driven by natural market forces rather than incentives, allowing for comprehensive cross-shopping among new, used, gas, electric, and hybrid vehicles.
About CarGurus, Inc.
CarGurus (Nasdaq: CARG) operates as a leading online automotive platform that aids consumers and dealers in buying and selling vehicles. Founded in 2006, CarGurus is the top-visited automotive shopping site in the U.S. and boasts a vast selection of inventory and a widespread dealer network. By analyzing billions of monthly site interactions, CarGurus provides valuable insights and software solutions that enhance the automotive buying and selling experience.
For additional insights and detailed analysis, the full CarGurus 2025 Recap & 2026 Outlook can be accessed here.