The nation’s largest car market saw a 7.7% drop in new vehicle registrations over the first half of 2026, highlighted by the California Auto Outlook sponsored by the California New Car Dealers Association.
Leading off: The Golden State, in data sourced by Experian, had 864,848 registrations in the first six months of the year.
Comparatively, that was approximately 70,000 less than the first half of 2025.
Notably, the state was 9.1% behind registrations in the first quarter, showing improving sales in Q2.
The state is on pace to finish around 1.73 million in sales, which is down from last year’s 1.8 million but ahead of 2022’s 1.58 million.
Hybrid sales surge: Hybrid sales reached a record sales percentage of 22.1% in the state.
The state has seen hybrid sales increase in each of the past four years.
Hybrid registrations tallied 191,000 in the first half of the year.
Of note, 75.7% of hybrid, zero EVs, and plug-in hybrids were sold at franchised dealerships.
“Californians are buying the vehicles that fit their budgets and the way they drive, and right now that means a lot of hybrids,” said Jessie Dosanjh, Owner of Stevens Creek Chevrolet and CNCDA Chairman, in the data release.
“Every hybrid registered in this state came through a franchised dealership. When a customer needs to compare options, work out financing, and know the vehicle will be serviced for the next ten years, they come to their local dealer. We support any rebates or state incentives that help buyers and move the market forward.”
EV market before incentives: Last week, California Governor Gavin Newsom announced 13 OEMs matching the $135 million in incentives for the program to provide up to $3,500 off for first-time EV buyers to partially replace the disappearing federal credit of $7,500, which ended in September 2025.
Without the federal incentive, EV sales were down nearly 25% in the first half of 2026 YOY, with 137,430 units sold.
California’s market share for EVs was 15.9%, which is nearly three times the national average.
The state accounted for 29.15 of EV registrations nationwide.
Notably, the Tesla Model Y led all models with 54,327 registrations.
Toyota dominance: Though California led the nation in alternative powertrain registrations, gas-powered vehicles made up 57.6% of the market.
The Toyota Camry led passenger car sales with 33,527 registrations, owning a majority share of the category.
The Toyota Tacoma (24,254) finished ahead of the Ford F-Series in truck registrations (18,654).
Overall, Toyota owned a 19% market share in the state.
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Bottom line: The nation’s largest market provides interesting data on the overall industry, especially with its adoption of alternative powertrains at a higher rate than the rest of the country, even ahead of new incentives.
Overall, Dosanjh told CDG News last week the California market remains resilient and diversified.
“We're very blessed in California. We have so many different types of economic drivers, whether it's tech or farming and agriculture,” Dosanjh said. “It's still a great car market. There are a lot of hybrids and gas vehicles that are more efficient and are meeting drivers' needs. It's definitely a healthy industry for dealers and OEMs within California now.”
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