Auto execs are hoping for the best and planning for the worst in 2026

DETROIT — The only consistency has been inconsistency for the U.S. automotive industry during the first half of this decade — a trend that’s expected to continue amid challenging market conditions in 2026.

The U.S. auto sector — a crucial driver of the economy estimated around 4.8% of America’s gross domestic product — has endured rolling crises since the Covid-19 pandemic shuttered U.S. assembly plants in early 2020. The global health crisis was followed by yearslong supply chain issues, semiconductor chip shortages, political whipsawing, tariffs and other challenges for all-electric and autonomous vehicles.

Automakers have been surprisingly resilient during the challenges, but those issues are now combining with more traditional industry problems of affordability and slowing consumer demand. That’s all creating a more challenging environment for automakers in 2026.

“We’ve got to plan for the worst and hope for the best,” Hyundai North America CEO Randy Parker told CNBC during an interview. “That’s the situation that we’re in right now.”

Other executives have expressed similar sentiments as they prepare for a “new” U.S. automotive industry: one that’s more expensive, smaller and, by many means, less predictable.

Automotive forecasters are calling for steady to lower sales this year, despite industry sales only hitting 16.3 million units last year. That was the highest level since the pandemic in 2020, but down from more than 17 million for five consecutive years before the global health crisis, according to industry data.

“Anyone in the auto industry … we should all be very careful about consumer demand,” Ford Motor CEO Jim Farley said Jan. 13 during an event for the Detroit Auto Show. “That’s really important.”

One of the largest industry issues — and one that’s a culmination of many factors — is the affordability of new vehicles.

New vehicles prices have climbed; the average transaction price was hovering around $50,000 toward the end of last year, up 30% from less than $38,747 to begin 2020, according to Cox Automotive.

Average transaction prices historically increased on average 3.2% year-over-year, but from 2020-2022 that average nearly tripled to 9%.

“Pandemic-induced production constraints and supply chain chaos didn’t just disrupt the market temporarily. They fundamentally restructured pricing dynamics. This elevated plateau is now the new baseline, which has the market anchored at these higher price points,” said Erin Keating, Cox Automotive senior director of economic and industry insights.

It’s not just vehicle prices hitting consumers’ wallets either. They’re also dealing with inflation, increases in maintenance and repairs, and 13% annual average increases for insurance over the past five years, according to Cox…