New-car market strengths/weaknesses, dealer tech stack refinement, and OEM accountability

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Hey everyone, we’ve never been more bullish on merging URL and IRL. And if last week showed us anything, it’s that when we get in the room, good things happen.

Here’s what we have cooking:

Hosting our first dealer retreat in July (sold out).
Launching a new HQ and studio space in South Florida… !!
Testing in-person meetups for CDG Circles members.

Stay tuned.

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Welcome to The Breakdown, an analysis of auto retail’s top trends, moves, and insights in under 5 minutes.

The annual NADA Conference is the place where dealers get a reality check on the year ahead.

And more than ever before, savvy auto dealers are using market analysis, forecasts, and customer data to make real-time investments that keep dealer groups growing.

Against that backdrop, we connected with operational leaders at last week's show in Las Vegas to narrow down the massive forces shaping the auto retailing outlook…

The 2026 new car market is expected to be solidly stable with limited growth.

Last year, Cox Automotive's Jonathan Smoke predicted new car inventory would stay relatively flat and hover just under 3 million units. He was right.

Automakers aren’t gambling on aggressive production pushes any time soon given all of the political and regulatory whipsawing from the Trump administration.
So, new-vehicle inventory levels began January 2026 at ~2.8 million units, down 4.8% year-over-year, according to Cox.
And with supply pretty stable, automakers are pulling back on incentives to likely help manage added tariff costs.

But that's keeping new vehicle prices near record highs. So, inevitably the affordability discourse is ramping up again.

During a J.D. Power summit on the first day of the conference, president Thomas King said that while affordability is definitely a problem, it's not getting catastrophically worse.

Payments jumped 20% ($134) from December 2021 to December 2025. But last year, payments only increased $11. So yes, affordability is getting worse, but sequentially, it's maybe not as bad as some folks believe.

The caveat: On NADA’s Live Stage, Cox Automotive's Mark Strand explained that interest rates are coming down on the short end, which helps with floorplan costs and consumer credit card bills. But long rates, the ones that actually affect auto loans, are staying sticky. So dealers shouldn't expect rate relief to juice affordability any time soon.

Dealer POV: With new car sales volumes, inventory, and affordability projected to stay relatively flat, dealers are being extra judicious about cutting expenses and simplifying operations.

A quick word from our partner

Dealers spoke. Upstart listened.

At NADA 2026, Upstart talked with dealers on the show floor and heard a clear message: slow, inflexible lenders are still costing you deals.

Upstart Auto Finance delivers faster, more flexible financing by using thousands of data points (not just a credit score) to approve more buyers with instant decisions, longer terms and higher LTVs.

Dealers like Schafer Chevrolet are already seeing the impact. Upstart quickly became their #1 finance source with faster, more profitable approvals, and they've been driving stronger back-end performance with an average back-end PVR of ~$2,000 for Upstart deals.

“Our F&I numbers are higher than ever.” — Jared Kucheck, General Manager, Schafer Chevrolet

See what Upstart Auto Finance looks like in action

Dealers are refining their tech stacks to simplify operations.

Dealers want fewer disconnected solutions, better data flow between departments, and infrastructure that helps employees get answers quickly.

Just take a look at some recent messages from CDG Circles members:

"Didn't spend a lot of time looking for new solutions, but more time looking for more from our current vendors. Maximizing what we already have in place and demanding more ROI."
"The store I recently took over is a complete rebuild so I'm saving those additional tools for once the processes are fixed and culture is realigned."
"We are putting focus on expenses. Where can we run leaner, whether it's vendors or headcount. Try to eliminate inefficiencies or tools that are not being fully utilized."

The elephant in the room: Meaningful growth in new-car sales volume and profitability will be tougher for dealers to achieve this year, making every customer touchpoint higher stakes. And sometimes, systems need to be added.

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For example, Dennis Gingrich, variable ops director at the Niello Company (a 10-store group in California), said their new-vehicle volume has already dipped while used-vehicle volume stayed slightly above flat.

Dennis Gingrich
The Niello Company

His response: Invest in customer data platforms (CDPs) to cut dependency on third-party advertising.

Which makes sense because dealership advertising spending grew 5.3% in Q4 and 4.0% for the full 2025 year, according to the latest Presidio Group-NCM Average Dealership Performance Benchmark report.

And by cutting some of those expenses and converting more from existing customers, dealers can protect profitability even if volumes stay flat.

However, dealers still have OEM requirements to deal with. And the brands with some of the most tense retailer relations are under the microscope.

Automakers laid out lofty sales goals, earning mixed reviews from dealers.

According to CDG Circles members who attended the Stellantis $STLA ( ▲ 1.87% ) dealer meeting at NADA, the automaker is pushing for 8% U.S. market share in 2026, roughly 1.1 million units sold.

But hitting that goal would require dealers to lift volumes by about 25% over last year.
A bold target, but dealers say it’s achievable given the new product cadence, more local marketing support, and stronger service retention.
"The past is the past. We all need to move forward," one member said.

However, several dealers raised concerns about new digital retail mandates. Stellantis plans to require vAuto Conquest, adding cost for stores already using other inventory tools. One member called it "an unnecessary expense," while another said the platform "doesn't even get Stellantis' competitive pricing close to right."

Volkswagen is facing similar dealer tensions but different frustrations.

VW is also trying to claw back volume in 2026. CDG Circles members who attended VW's make meeting said executives outlined a target of roughly 10% U.S. sales growth for 2026. And dealers are excited about plans for two conventional hybrid models, (widely understood to be the Tiguan and Atlas) that could help them get there.

But Scout Motors keeps dominating the conversation. VW and Audi retailers argue that allowing a VW-controlled brand to bypass franchise stores undermines their contracts and sets a precedent other OEMs could follow.

NADA CEO Mike Stanton agrees and has repeatedly labeled VW's decision to let Scout sell direct as "disappointing" and "misguided.”