Automotive Industry Insights – Summer 2026

Global auto sales in 2026 are expected to decrease by 2.5% due to a drop in auto sales in the U.S. and China. The 2026 decline comes after sales grew 3.3% in 2025, with growth across most major geographies.

U.S. auto sales were especially strong in the first nine months of 2025 but declined into the fourth quarter as tariff and inflation headwinds tempered demand. Slower sales have continued into 2026, as sales through the first half of the year are down 3.6%. The trend is expected to continue for the full year, as 2026 sales are projected to be 3% lower than 2025 due to increased costs, lower electric vehicle (EV) sales demand, and economic uncertainty.

Chinese auto sales have cooled through the first five months of 2026, down 4.2% compared to last year. China continues to lead the world in EV adoption, as 63% new cars sold in May 2026 were either battery EVs (BEVs) or plug-in hybrid EVs (PHEVs).

In Europe, new vehicle registrations have grown in 2026, with new registrations up 4.6% through May as strong demand for EVs buoyed sales despite geopolitical headwinds. EV adoption increased in 2026, as BEVs now account for over 21% of new sales. Despite Middle East conflicts and other headwinds, 2026 sales are expected to increase compared with 2025.

M&A activity in the automotive sector continued to stagnate throughout 2025 and the first half of 2026. As tariffs and political uncertainty have made buyers more cautious, only 158 deals closed through the first half of 2026, on pace for the lowest yearly total in over 10 years.

Public company equity performance for selected automotive indexes was negative through June 2026, with all indexes underperforming the S&P 500 over the past six months. The Automotive Dealers index was the only index to end the period with positive performance. The Automotive Mobility and Automotive Original Equipment Manufacturers (OEMs) indexes performed worst, down 16.8% and 17.5%, respectively.